The government should do more to help small businesses, and SMEs should do more to help themselves, a study finds A study of strategies for nurturing small and medium enterprises has reached one important interim conclusion: the government should offer more support. The study has also reached another important interim conclusion: SMEs must do their fair share if they are to succeed. The study is being conducted jointly by the Institute for Tourism Studies and Oxford Brookes University in Britain. It says SMEs should help themselves by improving their employment practices to attract and retain workers; by being more businesslike in their marketing; and by taking a strategic approach to their development. Institute for Tourism Studies assistant professor Ruth Yeung Mo Wah took part in the research for the study. “Most of the companies interviewed lacked marketing skills,” Ms Yeung says. “Companies must also be more willing to take risks.” The study began last year with one survey, in which researchers conducted in-depth interviews with a small group of owners of SMEs. The final results should be available this year, after the researchers do another survey based on the insights they gained from the interviews. The first survey covered a wide variety of enterprises, ranging from shops to professional service businesses to restaurants. Each employed between three and 75 workers and had annual turnover of between MOP800,000 (US$100,000) and MOP100 million. Ms Yeung says several business owners complain about the support the government gives them. They argue that the government should make its funding schemes simpler, give grants to start up businesses and give other forms of financial help. They say the process of taking on migrant workers takes too long and that restrictions on employing migrant workers mean they have too few of them. Easy mistakes Business owners criticise the government’s scheme for converting old industrial buildings into housing. They say SMEs use these spaces for storage, so the buildings are not lying idle. But the conversion scheme has made such buildings more expensive, business owners say. The average price per square metre of industrial space has tripled since the scheme began in 2011, official data shows. The preliminary results of the study indicate that successful SMEs have certain traits. One salient trait of any successful SME is that it is run by an entrepreneur with knowledge of and experience in the business he or she is in. “If you don’t know the product and the industry, it is easy to make wrong decisions,” Ms Yeung says. She says money is important for the survival of a new SME. She says an entrepreneur should make sure that adequate finance for at least the first two years is available. Only after two years does a business become eligible for interest-free loans offered by the government’s aid scheme. The preliminary results indicate that the ability to innovate is also important for the survival of an SME. This means not only the ability to come up with new products and production processes, but also the ability to use technology to become more efficient.
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