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Small firms poised to grow
The shadow of the economic crisis is almost gone and it is time for all small and medium-d enterprises to gear up once again to ride the next wave of growth, according to experts attending a seminar in HCM City this week.
Around 200 managers and business owners of small – and medium-d enterprises attended the seminar held yesterday by the Association of Certified Chartered Accountants – ACCA in cooperation with Saigon Entrepreneurs Club and Saigon Business Journal in HCM City.
"We need to develop an innovative mindset with the ability to constantly see new possibilities in old paradigms, generate new paradigms and thereafter take calculated risks. In this increasingly competitive business environment, innovation is customer-driven," said Reza Ali, the ACCA's business development director for the Asia-Pacific region.
"It is imperative to keep pace with scientific and technological advancements to make the shift to the new paradigm," he added.
To ensure success, SMEs must have captains with a long-term and broad vision and a global outlook, according to Reza.
"A small company which first spots an opportunity but delays an immediate action due to the lack of vision risks having to fight out a long-drawn battle with bigger and better-financed organisations. Speed is therefore the essence and we have many examples of how even big multinational companies have quickly merged to seize opportunities," he noted.
Vo Tri Thanh, Deputy Director of the Central Institute for Economic Management, said SMEs should learn how to work out their business plan and provide transparent information to the public, which would help win over those capable to offer them capital, including investors and banks. He said access to capital source was one of the big problems for SMEs.
The establishment of ratings organisations would gives banks better knowledge about SMEs that want their loans.
SMEs should also be equipped with information in order to mobilise funds from the stock market or venture funds, according to Thanh.
According to a survey carried out last year worldwide at SMEs by Economist Intelligence Unit for three accounting associations, ACCA, CGA Canada and CPA Australia, weak cash positions will continue to present a serious challenge for the sector in the medium term, and profit margins are going to take much longer to recover than revenue despite some impressive evidence of resilience among smaller businesses.
SMEs in general were still growing in terms of both revenue and employment, buoyed by the strength of customer relationships, which they saw as their most valuable asset going forward.
"Finance was, as expected, an issue, with bank lending very weak and other providers of finance unable to compensate and we found that banks had often retreated to a more formulaic treatment of SMEs, taking less time to understand individual businesses and industries," said ACCA chairman Brendan Murtagh.
"The real concern was that before the supply of finance was expected to stabilise in 2011, the recovery would remain fragile and a very substantial share of SMEs (29 per cent) either didn't expect conditions to improve or could not say when that would be," Brendan added.
The survey also found that SMEs with low growth expectations were relatively more concerned about the macro-economic environment, while growing SMEs were relatively more likely to be concerned with skills gaps in the labour market, competition and the burdens of regulation.
Governments have so far pursued a conservation agenda, one of "saving" or "protecting" small businesses. In the recovery, this approach to SMEs will no longer be sufficient.
Thuy Anh
vietnamnews
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