An Overview of Malaysia SME & The Definition

My company, BConnesso has been shortlisted and confirmed as one of the companies that qualify to participate Coach And Growth Programme lately, led by Proficeo who have been given the mandate by the Ministry of Finance and Cradle Fund to conduct the CGP 2013-2014 program that intended to bring together key players in the entrepreneurial ecosystem to support and fortify technology entrepreneurs grow their businesses to greater heights – More information about the program.

This is a 3 years program whereby 1 year coaching plus 2 years monitoring. We have started our training last September 2013 and the very first class is about Business Model Canvas, BMC. There is total 9 important building block in the BMC, and one of them is Customer Segments.

Starting a company is hard, and we all need a lot of advice and hard work along the way. So, it is time to start understanding more on my business target market and share with you all. Hope this site is worth reading. =)

Standard Definitions for Small Medium Enterprises

In Malaysia, SMEs formed 99.2% of the total number of enterprises and contributed to 56.4% to total employment (Dr. M. Mohd Rosli, 2012). Thus, competitive strategies among SMEs in Malaysia should be investigated given the significant presence in the economic growth of national.

As approved and adopted by National SME Development Council on 9th June 2005, the definitions of SMEs will be based on 2 criteria, namely the number of employees and annual sales turnover, applying for primary agriculture, manufacturing, manufacturing related services (MRS) and services (including ICT – my company fall into this category). Below is the summary of approved SME definitions:

Based on number of employees:

Category	Primary Agriculture	Manufacturing & MRS	Service Sector
Micro	less than 5 full time employees	less than 5 full time employees	less than 5 full time employees
Small	Between 5-19	Between 5-50	Between 5-19
Medium	Between 20-59	Between 51-150	Between 20-50

Based on annual sales turnover:

Category	Primary Agriculture	Manufacturing & MRS	Service Sector
Micro	Less than RM 200k	Less than RM 250k	Less than RM 200k
Small	Between RM 200k to RM 1m	Between RM 250k to RM 10m	Between RM 200k to RM 1m
Medium	Between RM 1m to RM 5m	Between RM 10m to RM 25m	Between RM 1m to RM 5m

What are The Key Success Factors of SMEs in Globalized Space Environment?

Accordingly to the finding of Central Bank of Malaysia, 2003, based on case studies done on the SMEs with more than 10 years in business, these are the important factor to concern:
1. Sound management capability and integrity
2. Sound business cultures and entrepreneurial spirit
3. Prudent financial management
4. High quality products and services
5. Effective program for human resources development
6. Strong support from financial institutions
7. Strong marketing strategies (including good network with suppliers)
8. Continuously looking for opportunities to expand

What are The Challenges Malaysian SME facing?

Based on the research of Muhammad et al (2010), Malaysia SME facing various difficulty such as
1. Recession – diminishing economic growth, increase of production costs
2. Barrier from global sourcing – which requires efficient risk management, relationship marketing and supply chain management.
3. Lack of state government support – especially on Halal industry with estimated figures of Halal trade of USD 2.1 trillion.
4. Relationship between multinational corporations and SMEs.
5. Insufficient exposure to intellectual property and bankruptcy issue
6. Lack of knowledge on legal issues in global business
7. Limited capital for business development of R&D
8. Less capital and effort invested to build brand in the global market

Apart of these factors, some of the existing literature do mentioned that common SMEs are facing problems in terms of low productivity, lack of managerial capabilities, lack of financing & increasing factor costs, heavy regulatory burden, intensified global challenges.

References:

1. Dr. M. Mohd Rosli (2012). Competitive strategy of Malaysian Small and Medium Enterprises: An exploratory Investigation. Malaysia, American International Journal of Contemporary Research.
2. Secretariat to National SME Development Council, Bank Negara Malaysia (2005). Definitions for Small and Medium Enterprises in Malaysia.
3. SME Info | One Stop SME Resources
4. Mohd Zulkifli Muhammad, Abdul Kamal Char, Mohd Rushdan bin Yasoa, Zakiah Hassan (2010). Small and Medium Enterprises (SMEs) Competing in the Global Business Environment: A Case of Malaysia.
5. Images credit to www.wix.com

I have done the very first reading & investigating on my business customer segments. Have you done yours?
If no, you should start it today! Every business starts with the customer, whereby we serve the customer’s needs, solving their problems and/or filling a gap in their requirements (not just only about the technology, product or services). Let’s get started to define the customer segment that your company aims to reach and serve! And if you don’t mind, let’s share with me here. =D