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1. Kuwaiti experience
Kuwait's experience with small businesses
The reality of industries and small and medium enterprises in Kuwait:
You know small businesses in Kuwait as those with fewer than workers, while known medium-sized enterprise as one that works out of the- factor.
Depending on the capital standard "of the Finance and Investment" emanating from the "Committee for the economic revitalization of the movement" it has identified small established as those that do not exceed its capital to KD thousand ( thousand US dollars).
1. The relative weight of the industries and small and medium enterprises in the Kuwaiti economy
2. regulatory framework for small and medium industries and institutions in Kuwait
3. funding framework for small and medium industries and institutions in Kuwait
1. The relative weight of the industries and small and medium enterprises in the Kuwaiti economy:
The percentage of small and medium-sized enterprises% of the total number of operating in the Kuwaiti national economy institutions. Given the distribution of small and medium-sized businesses in various sectors of economic activity within Kuwait, it was observed that.7% of small and medium-sized businesses operating in the industrial sector, and4% of small and medium-sized businesses operating in the agriculture sector, and% of small and medium-sized businesses working in the trade sector,% of small and medium-sized businesses operating in the services sector, and0.3% of small and medium-sized businesses operating in the mining sector, and% of small and medium-sized businesses operating in other activities, including community services and social services, and that As it can be seen from the following table:
2. regulatory framework for small and medium industries and institutions in Kuwait:
There is a specialist in Kuwait to provide services to small and medium enterprises alone, but there are several providers of services in general for all the big and small and medium enterprises, and these actors are:
A. The Department of Trade and Industry:
The Ministry of Trade and Industry supervision of the commercial companies and acts of Commercial Registration commercial and general stores, according to the provisions of the laws and regulations, and specializes in Industrial Affairs Department of the Ministry of Commerce and Industry oversee the organization of the industrial sector and the provision of services and encouragements for the development of the industrial sector, in the scope of the rules and principles set by the Industry Law No.6, which.
(B) of the Commission on the development of industries:
Comprising representatives of various government agencies related to manufacturing as well as representatives from the private sector. This Committee shall examine the systems necessary for the development of industry and proposals, and providing the means for organized and protected and encouraged, and give recommendations for industrial licenses in line with the general economic situation of the country.
(C) industrial development and consulting office:
Established in in cooperation with the United Nations Industrial Development Organization and the United Nations Development for the preparation of studies and evaluation of industrial projects and the provision of consulting services and industrial enterprises.
3. funding framework for small and medium industries and institutions in Kuwait:
Dealing industries and small and medium enterprises in the credit market in Kuwait on the same terms as those of large enterprises, and is to the small and medium industries and enterprises access to credit facilities and borrowing either from commercial banks or specialized banks such as Real Estate Bank and Industrial Bank.
The state and progress of the Industrial Bank of Kuwait prompt loan to support industrial development and an interest rate of3% for years, the bank offers loans in accordance with the following conditions:
• industrial license.
• subject to the approval of the project for the benefit of the bank.
• Be positive results of the feasibility studies for the project.
• that the project be of Kuwaiti nationality, and the shrine in the State of Kuwait.
• For the size of the loan, the maximum does not exceed% for new projects that capital less than half a million Kuwaiti dinars, and up to% for projects that increase its capital for million Kuwaiti dinars, but for expansion projects, the loan can be up to% of Additional investments.
• For interest rates, they range from5 -7.5% per year, where we find5% for the new project, and6% for the expansion projects, and7.5% for Industrial Projects Services and cases of reorganization of the financial structure of the company, and be made as follows:
- During the construction period and for a period of two years from the start of production is the payment of interest only, to be followed by interest and installment loan
- Repayment term of the loan varies according to the circumstances of each project, and required not to exceed ten years
Study and analysis of the reality of small and medium-sized businesses in the Gulf Arab countries have shown that there are many problems facing those facilities, and these problems can be divided into two types according to their source:
I: internal problems related to matters in relation to each stand-alone facility and be caused by an imbalance in the internal structure of the facility, and, therefore, these problems vary from one facility to another, and come such problems from within the enterprise, and therefore it is possible to control it and control if desired established in it.
II: external problems related to the climate of economic activity and the investment climate in general, have this problem impact on small, medium and large enterprises as well, but the impact more on small and medium enterprises according to their nature, come these problems outside of small enterprises and affect them and can not control them
We will try to limit the problems facing small businesses, through the quality divided into groups as follows:
Economic problems - funding problems - marketing problems - administrative problems.
The lack of information - the problems of organizational problems.
This will highlight all the problems, according to the source, whether from inside or outside the facility, as shown by analysis following figure:
1. economic problems facing small and medium-sized businesses
A. external economic problems
(B) internal economic problems
2. financing problems faced by small and medium businesses
A. external financing problems
(B) internal funding problems
3. marketing problems faced by small and medium businesses
A. external marketing problems
(B) internal marketing problems
4. administrative problems faced by small and medium-sized businesses
5. lack of information faced by small and medium-sized businesses problems
Some of the proposed solutions to resolve these issues
Some of the recommendations, which must work out
1. economic problems facing small and medium-sized businesses:
It can be divided into economic problems facing small and medium-sized businesses into two groups according to their source of problems, namely:
A. external economic problems:
It is problems related to climate and investment activity in the national economy as a whole, and the impact on small businesses be grown from within and no, these problems are:
1. contraction of economic activity in the region and the stagnation of trade and contracting activities of the movement .. and others, as a result of reduced government spending in recent years.
As a result, there is a surplus in the production capacities of the private sector enterprises in general, the lower the demand for small and medium-sized businesses products, so that the problem is now how these facilities to achieve a balance between the availability of their production capacities and lower demand for their products and services.
This confirms the results of the questionnaire, which was prepared for the small and medium-sized businesses in Saudi Arabia, reaching enterprises that suffer from shrinking the size of its% of the establishments in the study sample, while% of the establishments in the study sample size in expanding its business.
2. The inability of small and medium-sized businesses to benefit from investment incentives, and customs and tax exemptions, or get a free or low land prices, or access to energy at discounted prices, or obtain loans at a low interest rate. . And other, as investment incentives are intended to clearly and often encourage large businesses, and it clearly shows in the industrial sector0
3. The increase in national production display and the difficulty of export, as well as to compete with foreign products of the national production - especially in light of a free economy does not put prohibitive import restrictions - lead to inventory accumulation of small and medium-sized businesses, and shrinking revenues and slowing collected, forcing businesses small to make cuts in their prices, and reduce profit margins that will satisfy them, and it comes to a deficit in the cash flow of the entity forced them to stop payment of its obligations, which in turn leaves a negative impact on dealers with established whether they are individuals or large or small installations.
4. The problem of competition between small and medium-sized enterprises and to each other as a result of increasing the numerical enormous in those facilities that have entered the field of business during the development boom experienced in the region, as well as competition among small and medium-sized enterprises and other large enterprises on the other hand, then the competition between these national enterprises and between companies a third of the foreign hand.
It follows this competition do those facilities to reduce their prices in order to obtain new contracts or operations or the discharge of its stock, and the result is that in the end everyone is prejudiced by this decayed in prices (or the so-called price war).
(B) internal economic problems:
It is problems related to economic matters stem from inside the facility and are:
1. problems arising from the weakness (or lack of) study the feasibility of establishing the institution before embarking on a foundation, which would make it in finance or marketing or production position is weak and not commensurate with the requirements of the market or general economic conditions or the possibilities available to the owners of the enterprise.
2. The problem of unplanned expansions, it was noted that the owners of these establishments are conducting expansion and investment in buildings, furniture and buy a big commodity stocks, without planning and estimating future economic conditions, has resulted in this problem:
- The existence of idle productive capacities.
- Many of these facilities fail and exit the market.
3. The high burden of expenses and fixed indirect costs incurred by the facilities regardless of the volume of activity and turnover, such as rents buildings, management staff salaries and the like, the burden of the expenses of electricity and telephone consumption, in addition to the high cost of inventories to lock up capital in stagnant goods.
2. financing problems faced by small and medium-sized businesses:
It can be divided into financing problems faced by small and medium-sized businesses into two groups according to their source of problems, namely:
A. external financing problems:
These problems come when it resorts SMEs to external sources of financing in case of insufficient self-financing sources available to them.
As we find commercial banks adheres not to grant SMEs loans credit unless those facilities Her fame or to ensure the well-known figure, on the other hand, the development funds and other she has begun to intensify their terms so was unable to small and medium-sized enterprises are met or the implementation of each of these conditions, and on the Thus, large enterprises is accounted for now without the liquidity of small and medium-sized enterprises.
Even if small businesses were able to provide the guarantees required by the commercial banks, it will bear the high cost of financing, which is exhausting their budgets and deducted from the bulk of its profits.
This confirms the results of a questionnaire prepared by the Council of Saudi Chambers to explore the small and medium enterprises in the Kingdom, where it was found that% of the study sample installations dealing with the commercial banks, but given the quality of this deal was noted that% of respondents facilities to deal with commercial banks in the form of current accounts problems , while% of the sample establishments dealing in borrowing0.% of the sample establishments dealing through letters of credit and letters of guarantee, and mostly they are letters of guarantee. It was also found that the reasons why small businesses to borrow0.% of the establishments borrow to finance the daily operations, and% borrow to expand production capacity, and% borrow to finance crises emergency, and6% to borrow to pay off accumulated debts.
It also became clear from the results of the study sample that% of small and medium-sized businesses do not deal with the specialized financial institutions, while there is a% deal with specialized financing institutions, and often they represent craft workshops.
It was also noted that small and medium business enterprises resort to the forward purchase to overcome funding difficulties, where the sample of the study results showed that% of small and medium-sized businesses resort to buying futures.
(B) internal financing problems:
The financing comes in the internal problems of small and medium businesses from two sources:
1. the lack of separation between private individual entrepreneur's financial disclosure (or project owners individuals) for the project and financial disclosure, making the individual allows himself to compensate for the deficit in its own budget of the project budget in some cases, leading to the creation of financial confusion for the project.
2. neglect of most small and medium-sized businesses set aside reserves required and provided for by the accounting and financial rules, thereby reducing the sources of self-financing available for the project.
3. marketing problems faced by small and medium-sized businesses:
Most small and medium-sized businesses at present facing marketing problems, which of course vary depending on the type of facility and the nature of the activity it performs, commercial Valmncoh may face different from those faced by the industrial establishment or agricultural problems. And it can be divided into marketing problems faced by small and medium-sized businesses into two groups according to their source of problems, namely:
A. external marketing problems:
These problems relate to external factors that affect the marketing policy of the facility, and are:
1. Gulf consumer preference for foreign products to the problem of emotional motives based on its association with goods imported for a long period of time or to mimic European and American style.
2. competition problem between imported products and those of national products, due to the freedom almost absolute for the import of foreign markets, and the failure to provide adequate national protection products, and look this difficulty is evident in the field of food products and beverages and manufacture of inks, batteries, paints, furniture, and this problem has led to inventory increase the size of the national small and medium enterprises.
3. The problem of low volume demand a large segment of expats, especially coming from Asian nationalities Middle of the traditional consumption pattern of employment - as well for what they are the size of consumer spending was very low - and this in turn leads to the impact on aggregate demand in the Gulf states, size, since expats make up a significant part of the market, and that the East Asian labor represents a significant part of the foreign workers.
(B) internal marketing problems:
These problems come from the neglect of small and medium-sized businesses in the marketing side of its activity, and these problems are:
1. The problem of small and medium-sized enterprises interesting study expected to discharge their goods and services market, and lack of attention to make a prediction of demand for established products-sized studies
2. The problem of lack of marketing competencies, and the lack of sales forces generally, as a result of operating personnel are not suitable in terms of qualification and experience, and most of wages, bonuses and other terms of employment is not appropriate and do not achieve satisfaction and motivation to attract talent or even retain the existing powers under conditions of competition, as that there is a lack of knowledge and experience the true concept of marketing on the part of facility management, inventory and marketing concept on the agenda of sales and distribution, and there is also a lack of attention to marketing research and lack of information about the market.
3. The problem of the ability of small businesses to oblige traders certain prices, leading to chaos in the market and prices that are harmful to the facility in the end.
4. administrative problems faced by small and medium-sized businesses:
The administrative problems of the most important problems facing small and medium-sized businesses, and often these problems originate from within the enterprise, and the following problems:
1. centralized decision-making problems: where one person often undertaken the responsibility of all administrative tasks such as senior management, production, finance, marketing, the responsibilities are distributed in large facilities on more than one person, but also on several departments.
2. The problem of lack of capacity and management skills among those in charge of administration in these facilities: the prevailing pattern of "owner-manager is a professional," which lacks administrative experience, as it is may take over administration as one of the family members, and also characterized by low education and training level.
3. The problems arise because of not following the methods and procedures of sound management in the conduct of affairs institution, and resort to ijtihad Profile and rely on some working experience and that may not be predominantly organization or suitable for the conditions of work of the Foundation, these problems is the lack of thoughtful work systems such as accounting systems, and procurement systems, warehouses, and systems cost calculation, systems and personnel affairs, and sound operating systems.
4. The lack of attention to the analysis and classification of jobs, leading to a random selection of employees, in addition to the failure to follow a convincing policies for workers in the field of wages and salaries, training and development of managerial competencies, due to the adoption of these installations on foreign labor, although these policies occasion in the past, it is in time The present is so special with the trend of expansion in the operation of national manpower to extend to small, medium and large Bmncath the private sector.
5. The problem of lack of trust between the manager and staff, and the consequent decline in the performance of employees at the facility level.
6. lack of regulation clearly defines the responsibilities of the entity authorities and private functions, and the consequent emergence of several problems, are:
(A) the lack of specialization and division of labor.
(B) the lack of regulation and clear divisions within the establishment.
(C) the lack of regulations governing the systems or internal workflow within the enterprise.
5. lack of information faced by small and medium-sized businesses problems:
Due to the inability of small and medium-sized businesses (or unwillingness) to spend on research and provision of consultants and communication sources of information, they face the problems of lack of information, which in turn affect the activity of the institution but also on the survival and continuity, The most important of these problems:
1. The lack of information on companies and their evolution and the nature of its activity and the volume of production and financial ability, cause the occurrence of small and medium-sized enterprises, traders and even individual investors prey to fictitious companies and projects, fraud and external fraud.
