Myanmar SME sector situation

Myanmar SME owners are major drivers of country economy. They hire local people and reduces unemployment rate. However, these owners must change their mindset and habits if they want to develop in the future.

In rural regions, you can find SME owners at tea shop. Normally, they sit at tea shop. Local SME owners manage their firms from there. It is accustomed for local owners.  Most SME owners decide based on their emotions.

Since habits make a person good or bad, it is the same for any organization. If one organization has good basic structure, stable order and clear vision, this organization develops faster.

In this article, we will point out why Myanmar SME are still small although average of their lifespan is more than 10 years old.

Unstable political situations in past years

First of all, all start with political situation. Past years, Myanmar had very unstable political situation. No one can guarantee your business. There was chaos very often. So, most owners usually don’t invest too much. They run their firms with minimal capital.

Business owners rarely spend money to grow their firms. Myanmar SME owners don’t buy updated machines. They also don’t invest latest technology and never hire consultants.

And all want to squeeze size of the business to minimum. This concept hurts them a lot. Average productivity of local firms is so much lower than local firms of neighboring countries.

When the government opens the door to international companies, local firms are very small to compete. There are weekly changes in Myanmar economy. As you know, economy of scales is true for every industry. If one firm can produce more goods, costs are reduced. So, it can compete in the market with low pricing. Local firms need to upgrade because their capacity is too low.

Myanmar SME Owners need to change their mindset

Secondly, mindset is another major drawback for local owners. One firm needs professionals to transform from SME to corporate. Normally, owners prefer to hire relatives, and close friends. They call them as inner circles. Owners hire talents only to support these inner circles.

Most local firms don’t have strategic HR policy. Some even don’t have that department. So, talents are rare in these firms.

For every industry, Myanmar market is now more competitive than last 5 years ago. So, local firms face difficulties to survive in very competitive market.

Moreover, local owners rarely want to hire specialists. They give almost every task to one employee. As every management guru knows, one employee can’t be smart for every task.

In 2018, most local firms struggle to keep talents. After working in local firms for 2 to 3 years, employees want to move another good paid company, especially international firms.

Weak Organization Structure

Thirdly, most local founders don’t know how to structure their companies. Moreover, business owners often confuse functions. For example, they can’t clarify differences between branding and advertising.

Local firms usually don’t know how to monitor their staffs. They are not accustomed with CRM software and management platform. So, most of the time, local owners can’t improve productivity of their organizations.

Moreover, consumers behavior changes make local firms troubles. It becomes difficult to maintain loyal customers. Brand switching behavior is everywhere. So, SME owners face more challenges in the future if they can’t build agile organization structure.

In brief, most Myanmar SME firms have low capacity, less talents and weak organization structure. To overcome these challenges, these owners need to talk with consultants very often. Also they have to follow advises of consultants.

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