Women-owned SMEs in Malaysia: Problems and Challenges

Norbaiti binti Tukiman1 Zahariah Binti Mohd. Zain2 and Rafidah binti Abdul Karim3 *
Norbaiti Binti Tukiman1, Faculty of Computer and Mathematical Science, MARA University of Technology,78000 Alor Gajah, Melaka 2 Zahariah Binti Mohd. Zain, Faculty of Business Management, MARA University of Technology, 40450 Shah Alam, Selangor 3 Rafidah Binti Abd. Karim, Academy of Language Studies Address, MARA University of Technology,78000 Alor Gajah, Melaka * E-mail: baiti09@yahoo.com, zahar297@salam.uitm.edu.my, feida16@yahoo.com
1

Abstract
Many studies have shown the significance of women-owned businesses which have contributed to the growth of the global and local economy. This growth has been increasingly felt over the past decade. Today, women in market economies own more than 25% of all businesses and women-owned businesses in Africa, Asia, Eastern Europe and Latin America are growing rapidly (Aida, 2009). In the globalization era, although women who own businesses are growing rapidly, they are still facing some problems and challenges. This study aims to support and encourage sustainability of SME business activities and contribute suggestions to overcome the problems and issues of women-owned SMEs. Samples of 110 from 125 women owned-businesses in SME sectors was picked non randomly using convenience sampling technique and answered questionnaire of problems and challenges of womenowned SMEs in Malaysia. By using Statistical Package for Social Science (SPSS) 16.0, this study examined the demography of women-owned SMEs, problems and challenges in four SME sectors which are manufacturing, servicing, retailing and general business. From the analysis, the results showed most of women involved in business have family business backgrounds, experiences in business and their level of education are SPM level. The main problems faced by women owned-SMEs were the competitiveness, workers problems and lack of capital sources. The main internal challenge faced by women-owned SMEs is persistence and patience to achieve goal while the main external challenge faced by women owned-SMEs is market price. Keywords: Women-owned SMEs, challenges, Small Medium Enterprise (SME) Introduction
One Village One Industry is the slogan introduced by Malaysia Prime Ministry, Dato Seri Najib Tun Razak to promoted and supported Small Medium Enterprise (SME) in Malaysia. Besides, Malaysias government spent about RM628 Million for development of SME in Ninth Malaysia Plan since 2006 (Utusan Malaysia, November 2009). This amount has been increased year by year to support and encourage the development of this industry in Malaysia. Therefore, it showed that SME plays important roles towards economy growth in Malaysia. The involvement of women in SME industry was also increasing year by year due to their awareness and motivation to upgrade their economy and jobless among graduate students from university force themselves to involve in business. Today, women in market economies own more than 25% of all businesses and women-owned businesses in Africa, Asia, Eastern Europe and Latin America are growing rapidly (Aida, 2009). Therefore, this is not impossible that entrepreneurs world will take over by women because of their attitude which are very committed, competence and proactive (Zaharuddin, 1995) . Entrepreneurship, particularly among women in developing countries (Minitti, 2010) seems to offer an improvement in the standard of living as well as a path out of poverty. Entrepreneurship is now growing at nearly three times the rate among women as it is among men. Research from Centre for Womens Business (2009) found that 28.2% of the business in US owned by women. In Malaysia, women in Kelantan started from farmer background family which exists in agriculture subsistent. When they have surplus, they sell their harvest in market (Abdullah Munshi, 1968). The tradition continues until now and therefore the active involvement of women in Kelantan in economy and business contribute towards impression due to ability in family as a leader and

help to earn income into the family (Nik Zainab, 1985). SME is crucial in any country in the world as it contributes towards the countrys economic growth. In Malaysia, GDP by state and kind of economy showed an increase about 8% from year 2006 to 2007 especially in manufacturing and servicing sectors. Basically GDP was contributed by SME businesses. Therefore, it showed that SME offers career and opportunities income to entrepreneurs. It also important in competitiveness challenges and generate multipurpose consumer product. SME business offer early preparation before get into global market and it produces into source of new paradigm, creativity and innovation. From there, SME contributes support towards industrial country process, support development of country, development of rural area, provide essential basic product to large industry, an avoid waste on sources so that it will encourage resources fully frugal. However, SME also deals with some familiar problems and challenges. Md.Ali (2009) identified problems faced by SME entrepreneurs were financial problem, lack of skill worker, difficult to find raw material in lower price, lack of location and appropriate building in business, problem in marketing product, failure in business planning, failure in cash flow planning, not aware of competitors aspect, ineffective customer service, workers problems, limited skill, none strategic business location, pessimist in achieving vision and paradigm in business, dearth of experience, want to have a fast track to expand business, business partner uninterested and quit and also the problem of negative thinking among SME entrepreneurs. Although women-owned businesses are growing rapidly, they are still facing problems and challenges. The problems and challenges were not same in certain countries and even in state in country. It is due to the culture and environment or location where the business is formed. This study aims to support and encourage sustainability of SME business activities and contribute suggestions to overcome the problems and issues of women-owned SMEs. Therefore, this research proposed a few questions in order to achieve the aim of study. The research questions are as below; 1. What are the profiles and business profiles of women-owned SMEs?. 2. What are problems and challenges facing by women-owned SMEs? From the research questions, the researcher will find out some objectives, there are to examine the demography of women-owned SMEs and identify the problems, internal and external challenges faced by women-owned SMEs.

Scope of Research This research mainly focuses on women-owned SMEs in Selangor and Kuala Lumpur which are located in three Kuala Lumpur, Shah Alam and Klang. SME sector have been divided into four sectors. There are manufacturing, servicing, retailing and general businesses. The researchers find out the demography and profiles of women-owned SMEs. Then, the researchers identified the problems, internal and external challenges faced by women-owned

Materials and Methods

The research methods employed in this study consists of quantitative methods which the descriptive statistics were used in analyzing the data. All the data were presented in the form of graphs, charts, frequency tables and mean value score. The researcher identified the problems, internal challenges and external challenges faced by the women owned SMEs by using this method. This study was carried out by using a survey questionnaires and interviews to get the data from women-owned SMEs in three selected districts at Selangor and Kuala Lumpur. SMEs were categorized into four main sectors in this study which are manufacturing, servicing, retailing and general bussiness. Samples 110 from 125 women-owned SMEs have been participated and non-randomly selected using convenience sampling technique. The subjects were chosen from three major districts in Selangor and Kuala Lumpur that are Kuala Lumpur (55 respondents or 55%), Shah Alam (48 respondents or 43.6%) and Klang (7 respondents or 6.4%). Study procedure Each sample was given a questionnaire to be completed. The questionnaire is a crucial element in this study for identfying the value of study overall. The questionnaire was categorized into four sections, Part A, B, C and D. Part A consist of Information of women-owned SMEs background, Part B consist of bussiness background, part C consist of bussiness problems and part D consist of internal and external challenges of women-owned SMEs. This study used interval scale and ordinal scale in Part A and B, whereas in Part C and D, the reseacher use Likert Scale from 1 (strongly disagree) until 5 (strongly agree). This study carried out 30 samples to be tested in the pilot study. It is important to test the reliabilty and validity of the questionnaire. The result showed that cronbach alpha is more than 0.6 and it implies that the questionaire is reliable and valid. Besides that, the interview also was carried out for finding out to what extent the respondents understood the questionnaire and answered the questions in the

questionnaire. This approach needed two ways interaction between the researcher and the respondent. Through this approach, the researcher found out more about the problems and challenges faced by the women-owned SMEs and any difficulties questions would be explained by the researcher .

Results and Discussion

Analysis of Data Below is result from women owned-SMEs profile. Table1: Women owned-SMEs profile. Item Age Classificationl 20-29 30-39 40-49 50-59 > 60 Single Married Single-Mother Primary School PMR/SRP SPM STPM University Yes No Yes No Housewife Government Servant Private sectors Others Yes No Frequency 22 36 33 16 2 11 85 14 2 2 52 18 30 68 38 76 32 36 10 51 11 56 49 % 20.2 33 30.3 14.7 1.8 10 77.3 12.7 1.9 1.9 50 17.3 28.8 64.2 35.8 70.4 29.6 33.3 9.3 47.2 10.2 53.3 46.7

The result showed that majority women-owned SMEs in the survey are in the age of 21-30 years (33%), 77.3% are married, their majority education is SPM level (50%), have family in business (64.2%) and have experience in business (76%), have been working in private sector before involve in business (47.2%), have been attended entrepreneur course (56%) and they have started the business in the age of 21-30 year old (50.5%). Table 2 : Women owned-SMEs business profile. Item Years Established Classification 1980-1989 1990-1999 2000-2009 2010 Sole proprietor Partnership Sdn. Bhd Manufacturing Servicing Retailing General business Nil 1-5 6-10 11-15 16-20 Nil 2 3 4 5 >6 Own saving Familys Loan Friends Loan Property heritage Others financial loan < 1 year 1-5 years 6-10 years 11-15 years 16-20 years > 21 years Ownself Rental Mortgage Frequency 3 21 74 11 79 18 12 39 31 37 3 10 81 14 3 2 77 19 4 4 0 6 73 15 1 1 16 12 56 23 8 7 3 1 103 6 % 2.8 19.3 67.9 10.1 72.5 16.5 11 35.5 28.2 33.6 2.7 9.1 73.6 12.7 2.7 1.8 70 17.3 3.6 3.6 0 5.5 68.9 14.2 0.9 0.9 15.1 11 51.4 21.1 7.3 6.4 2.8 0.9 93.6 5.5

Type of Business Business Sector

Status

Education

No. of Employee

Do you have family in business? Do you have experience in business? What is your career before involve business? Do you have been attended entrepreneur course? Age starting business

No. of Branches

Source of Starting Business

Business length until now

< 20 year 21-30 year 31- 40 year 41- 50 year 51- 60 year

10 55 33 9 2

9.2 50.5 30.3 8.3 1.8

Business Premises

Average Monthly Sales

< RM5000 RM5,001 RM10,000 RM10,001 RM15,000 RM15,001 RM20,000 RM20,001RM25,000 >RM25,001 Decrease No change Increase

40 29 12 10 9 6 22 28 57

37.7 27.4 11.3 9.4 8.5 5.7 20.6 26.2 53.3

competitors in market. The finding support by Thuaibah et.al (2007) that showed highest percent amount 62.3% in their result regarding competitors problem by women entrepreneur during handle the business. The second problem is employee that contributed the problem to the women-owned SMEs. The owners face with lack of workers, skill workers and their workers attitudes and discipline. Finally, the problem is financial capital which includes lack of capital to do business, financial management problem and difficult to get loan from bank, private or government. This findings also support by Thuaibah et.al (2007) which state that the main problem when started the business was capital sources problem. According Lee Lee and Pennings 2001 and Gilbert et al, 2006), financial resources is one of factor can determine the success of firms. Table 4 : Internal Challenges Faced by Women Entrepreneur Internal Challenges Item Mean 1. Persistence and patience to 4.11 achieve goal 3.98 2. Self-esteem 3.59 3. Financial Stability 3.51 4. Knowledge in various field 5.Skill in various field 6. Persevere to face Psychological and Physiological Challenges 7.Comfortable and convenient with current situation 8. Business is own need and not people want 3.41 2.98 2.81 2.09

Business Performance (compare 2009 to 2010)

From table 2, majority women-owned SMEs established their business within year 2000-2009 (67.9%), type of their business are sole proprietor (72.5%), their business sector is manufacturing (35.5%), number of employee is within 1-5 employees (73.6%), no branches (70%), using their own saving to start business (68.9%), business length until now is within 1- 5 year (51.4%), business premises are rental (93.6%), average income are less than RM5000 a month and their business performance is increase compared from year 2009 to 2010 (53.3%). Base on the problem identified, chart 1 showed the result of finding as after the data from the Likert scale. Chart 1: Score Means for Business Problem Faced by the women-owned SMEs.

Chart 1 illustrates score mean of business problems faced by women-owned SMEs. The three main problems faced by women-owned business were competitiveness, employees and financial problems with the value means were 3.78, 3.08 and 2.93 respectively. They have struggled and competed the price, product and others new and established

Table 5: External Challenges Faced by Women Entrepreneur External Challenges Item Mean 1. Market Price 3.62 2. Raw Material 3.32 3. Industry (Competitive among Entrepreneurs ) 3.26 4. Country (Nationalism/Patriotism) 3.26 5. Local Community (Neighbors 3.2 and Friend) 6. Close Family (Husband, children, 3.11 family) 7. Information Technology Usage 2.74 The challenges have divided into two categories which are internal and external challenges. According to Thuaibah et.al (2007), women involve in business because of internal factor more than external factor with different mean value 0.36 or 13%. This showed

that the internal factor which related to internal challenge is more important towards their achievement of business goal. From the Table 4 and Table 5, the findings showed that the three main important internal challenges faced by women-owned SMEs are persistence and patience to achieve their goal (4.11), self-esteem or self confidence in doing business (3.98) and need financial stability to support and survive in business (3.59). Whereas, the three main external challenges faced by women-owned SMEs are market price (3.62), raw material (3.32) and industry which include competitor among entrepreneurs (3.26). Obviously, if the challenges too high and women cannot survive, this will influence their performance in their business in other word they might close the business. If the women take the challenges as positive way they will survive and create ideas to overcome problems and challenges.

Conclusions
This research is empirical studies which focus to investigate the women-owned business profiles and indentify the problems and challenges faced by women-owned SMEs. From the results, majority of women-owned SMEs have experience and their education is in the middle level (SPM). According to Mullin (1996), the education and experience are important because they facilitate women to gain knowledge and provide competencies in their business. A few researchers have proved that education and experience have effect and significant value on sales and employment growth of new firms (Cooper et al, 1994 and Baum, Locke and Smith, 2001). In additional, the finding also showed that the main problem is competitor. Many studies said that competitors are the big problem faced by entrepreneur (Thuaibah, 2007 and Mohd. Hassan, 2007). Therefore, women have to upgrade themselves with knowledge and skill in the era competitive edge. They need to boost their skill and knowledge in various fields including IT knowledge, financial management, marketing, communication and so on. Good and skilled employee is important in the organization will drive the success of company visions. What the problems their faced was they having indiscipline and unskillful workers. It might be lack of how to select human resource in the business. Therefore, it will impact the growth of business. Thus, to solve the problems that faced by the women-owned SMEs, it is suggested that women can actively participate into a few organizations that offer some benefit training especially course of financial management, strategic marketing, Information technology, e-business and other training which can develop competencies of women-owned SMEs and enhance their business. Besides, they can also develop their networking, exchange ideas, take business opportunities and sharing knowledge and discuss

problems through the program offered. For the manufacturing business, they can apply fish born analysis or Ishikawa diagram to identify the cause and effect of problem faced in their firm. Besides, they can apply risk business analysis to calculate, evaluate and manage the risk of their firm and they also can apply SWOT analysis to view their strength, weakness, opportunity and threat of their business. The use of IT should be promoted which can make their business globally, effective and efficient. Women-owned SMEs have to increase their knowledge and skill of IT to make sure they are not behind of their competitors. The research showed that IT usage is the last challenge (mean: 2.74) which majority of women in the study are familiar in IT and use IT in their business. Finally, in order to keep their product sustained and qualified, they should do research and development (RND) on their product and services. It will give value added the product and services as to meet customer satisfaction. Womenowned SMEs can collaborate with other government agencies or academic institutions to minimize cost of RND and therefore reflects win-win situations to both parties and enhance the quality and the credibility of product produced. To increase number of entrepreneurs among women, the government and other agencies can promote Entrepreneurship Programs and SMEs business in this country. The current training program should be proceed and must add the value with dynamic programs and suite with industry and current issues. Besides, they can nurture and start of entrepreneurship culture beginning at primary school with produce entrepreneur subject in co-curriculum and provide mentoring program within new entrepreneurs and existing entrepreneurs. Finally, bank and other agencies like MARA should investigate their loan process to make easier for women entrepreneurs make a loan to start business and expand their business. .

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