26 Aug - 5 min read
Starting your own business is something we talk about quite often here on RinggitPlus. We cover topics from how to get started with making money off of your hobbies, the different kinds of business entities you can register as, and even what to figure out before you even start a business of any kind.
Knowing the kind of company you have will not only affect your day-to-day operations, it would also affect how the government treats you and what sort of perks or pitfalls you should pay special attention to.
One category of enterprise that plenty of new businesses fall into would be SME businesses or Small Medium Enterprises. Not quite sure what that entails? Let’s explore this type of enterprise further then.
SME stands for Small or Medium Enterprises, which means their number of assets, number of employees, and amount of revenue have to be below a certain threshold to qualify. The thresholds depend on which industry the enterprise operates in, which country it’s based in, and several other factors.
SME businesses play an important role in most economies but particularly so for emerging economies like Malaysia. SMEs contribute 80% of new jobs in emerging economies and most people with formal occupations in these economies work for an SME.
The strength of SMEs is that they can innovate faster and come up with new solutions to existing problems in their industry. However, due to their modest size and relative volatility compared to larger enterprises, it’s harder for them to secure funding and capital. But since their continued growth is an essential contributor to developing economies like Malaysia, it bodes well for the government to provide some assistance to help them along.
Before they can do that though, they would need to determine the specific criteria that describes SME businesses in Malaysia.
As we’ve mentioned above, different countries around the world apply different rules when deciding whether or not an enterprise counts as an SME. For Malaysia, the Companies Commission of Malaysia (Suruhanjaya Syarikat Malaysia) defines SME businesses like so:
|Manufacturing||Sales turnover from RM300,000 to less than RM15 million OR full-time employees from 5 to less than 75||Sales turnover from RM15 million to not exceeding RM50 million OR full-time employees from 75 to not exceeding 200|
|Services and Other Sectors||Sales turnover from RM300,000 to less than RM3 million OR full-time employees from 5 to less than 30||Sales turnover from RM3 million to not exceeding RM20 million OR full-time employees from 30 to not exceeding 75|
Now you can head over to SME Corp Malaysia’s official website and see the resources available to you. Their assistance programmes include, but are not limited to:
These programmes also include training, courses, and resources on how to beef up your enterprise, be more competitive in the market, as well as assist your business in coming out on top. And since most side businesses will probably fall under the SME category, your side gig would definitely benefit from these initiatives.
Another thing you should think about as an SME business owner is financing. Taking out a loan for your business is a common means of funding and running your operations. You can choose to take out either a business loan or a personal loan – business loans may have lower interest rates and larger financing amounts available, but personal loans are usually easier to obtain.
You may know that you can obtain loans from banks, but you can also take one out from a licensed moneylender instead. Licensed moneylenders are like banks in that they legally lend out cash at an interest; they’re just not considered banks because they don’t offer the other services that banks do. Licensed moneylenders tend to charge higher interest rates than banks, but it’s generally considered easier to obtain a loan from a licensed moneylender than a bank.
You can consider obtaining a loan from a licensed moneylender such as Icon Venture Capital (IVC). IVC provides both personal and business loans across a range of interest rates from 8% to 18% per annum with zero processing fees and set early termination and late penalty fees (6-month interest and 8% of outstanding amount respectively). So, if you need to take out a loan for your SME business, consider licensed moneylenders as a viable alternative to traditional banks.
Now that you know how to tell if your business is an SME, the important role you play in the country’s economics, and how you can take advantage of the opportunities provided by the state, we hope you can use this information to build and grow a better SME business for yourselves.
Have anything to add to this article? Do share your thoughts and ideas with us in the comments section down below!
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