SMEs: It’s tough to maintain sales, profit margins

17 Jan 2019 / 13:26 H.

PETALING JAYA: Maintaining sales and profit margins are the primary concerns faced by the small and medium enterprises (SMEs), according to a recent nationwide survey by CTOS on its SME customers.

CTOS Data Systems group CEO Dennis Martin said with 37.1% of Malaysia’s gross domestic product coming from SMEs, the issues that affect them will undoubtably affect Malaysia as a whole.

“We are seeing that issues such as pricing and competition are factored much lower down the list, this may mean that the SME sector is looking at consolidating positions in 2019, rather than looking towards expansion,” he said in a statement last Friday.

Using a sample of SME respondents from a diverse geographical range, a focus on sales and profit margins, rather than a focus on new customers and competition, shows that SMEs are shoring up their existing customer base and finding ways to be more productive and therefore profitable in an uncertain environment.

Meanwhile, cash flow is the second largest concern as 37% of respondents claimed that it is a major problem, giving further credence to the theory that SMEs are feeling the financial pinch as larger organisations may be struggling to meet commitments to SMEs.

At the other end of the spectrum are government policies, of which only one fifth of SMEs are concerned about.

“The lack of concern over government policies in comparison to financial drivers such as profit margins and cash flow issues can be taken as a generally positive note,” said Martin.

The recent 2019 budget allocated RM17.94 billion for SME development in 2019 under the Third Focus: To Foster an Entrepreneurial Economy. Among the key initiatives include financing, Industry 4.0, export, tourism, agriculture, entrepreneurship, human capital development and incentives.

Martin said with support on a national level, SMEs are finding that they are able to concentrate on doing business regardless of the effects of potential governmental or regulatory issues, which correlates with its survey findings.

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