SMEs play an important role in Pakistan's economy. They provide income and employment opportunities, especially for people in rural areas. While large-scale manufacturing grew by 15.4%, SMEs are core to reducing poverty and driving innovation. Pakistan has over 3.2 million SMEs accounting for 40% of GDP and 30% of exports. SMEs operate across agriculture, industry, services, infrastructure and communication sectors. Franchising is an arrangement where a franchisor licenses its business model, trademarks and support to franchisees. It allows for rapid expansion, consistent quality and risk sharing while leveraging an established brand.

1. Role of SMEs
BY: ALI RAZA QURESHI

2. Definition of SMEs
A generalized definition small and medium size
firms.
• Small: Among 10 to 35 employees and productive assets
ranging 2 to 20 million.
• Medium: Among 36 to 99 employees and productive
assets range of rupees 20 to 40 million.

3. History of SMEs
• Small business was discovered about more than 4000 years ago.
• HAMMURABI, the king of Babylon introduced the first 300 business laws.
• These laws known as Code of HAMMURABI.
• The time when the SMEs was discovered on 28th October 1998 4:10 PM.

4. Role of SMEs in Pakistan
Pakistan has emerged as the second rapidly growing economy in
Asia after China. Even though the large scale manufacturing
registered 15.4% growth but small and medium enterprises (SMEs) is
the core issue in the country’s progress and especially for the
prosperity of masses that are surviving with low scale income due to
which Pakistan ranks 135th out of 174 countries oh Human
Development Index. The assessment of the role of SMEs in Pakistan is
of vital importance.SME produces the income stream for masses
located in the countryside and the capitalists associated with this
activity that is generally medium or small as the name suggests.
SMEs will be the main source of poverty reduction in Pakistan that
will create the value and innovation for the country in the days to
come. The thing that really needs serious attention is to remove the
unnecessary bureaucratic procedures.

5. Scale of SMEs
A business in which minimum one and maximum 9 human
Resources involved engaged that is called Micro business or
entraprices. If in any business 10 to 35 peoples are engaged or
employed with 2 to 20 million working Capital involved these
kinds of business is Called Small Scale that also Shows if less then
2 million working Capital is involved it Count in micro business at
the Same time if the business is employing 36 to 99 H.R with 22
to 40 Capital that business is Called medium Scale businesses.
According to the Published definition of Smeda March 2008 but
here in Pakistan we have multiple Concept of SMEs some
Institutions 250 HR Count as SME.

6. Structure of scale of SMEs
Micro Small Medium

7. Diagram of Scale of SMEs
Medium
Economy
Small Micro

8. Graph of Scale of SMEs
20-40M
2-20M
Less than 2M
Finance
Small
Micro
Medium
1-9 10-35 35-99

9. Sources of startup Capital/Financial
It is the process of estimating and generating
finance that is required and estimated the
contribution of each source.

10. Structure of Sources of startup Capital/Financial
Primary Secondary
Self
Family
Friends
Loan
Banks
Partnership

11. Diagram of Sources of startup Capital/Financial
Business
Financial
Sources
Self
Primary
Family
Friends
Secondary
Partnership
Banks

12. Graph of Sources of startup Capital/Financial
SoSC
ECFES ( Expected Capital From each source )
Partnership
Banks
Loan
Friends
Family
Self
Partnership
Self
Family
Friends
Loan
Banks

13. Where SMEs Operate?
SMEs operate in all five sectors of Economy

14. Sectors of SMEs
• Agriculture Sector
• Industrial Sector
• Service Sector
• Infra-structure Sector
• Communication Sector

15. Structural Representation
Sector of SMEs
Agriculture Sector
Communication
Sector
Service
Sector
Industrial
Sector
Infra Structure
Sector

16. Diagrammatical Representation of SMEs Sector
Agriculture Sector
Industrial Sector
Service Sector
Infra Structure Sector
Communication Sector
Economy

17. C
I
S
I
A
0
Graphical Representation
1 2 3 4 5

18. Provincial Share in the SME Sector

19. • The number of SME in Pakistan is
estimated to be 3.2 million, with the SME
sector's contribution to the national gross
domestic product GDP
• Being 40%. With a share of 30% in
Pakistan’s total exports.

20. Business Shutdown/closing
There are two of closing the Business or Course:
BUSINESS FAILURE
Main reason financial loss to a
creditor
1. Ineffective & inefficient
management.
2. Inadequate financing.
3. Industry weakness. (Internal &
External)
4. Inexperience (Owner,
Management, Employees)
5. Inadequate Management
(limited management not on the
bases of business requirement)
BUSINESS TERMINATION
No longer exist for any reason
1. The owner may have an
opportunity to sell his or her
business to some one else for
healthy profit.
2. The owner may be move on to
new business or to retire.
3. The market of Business Product
or Service may have changed.
4. The owner decided it was more
attractive to work for some one
else.
5. In cause of losing control on
business or dependent on others
for management, & financial
matters.

21. Structure of Business Shutdown/closing
Termination Failure
Shift
Selling
Bank Default
High Payable
Owner Death
Owner Change
Lack of employee
Depending on Single Idea
Fraud
High Receivable
Financial losses
Delts
High Credits

22. Diagram of Structure of Business Shutdown/closing
Depending on single idea
Lack of Employee
Owner Change
Owner Death
Selling
Shift
Fraud
Financial Losses
High Receivable
High Payable
Bank Default
High Credits
Delts

23. Graph of Structure of Business Shutdown/closing
BT BL
Shift
Selling
Owner Death
Owner Change
Lack of Employee
Depending on single idea
+
-
BF
No Profit No Loss
Bank Default
High Payable
Financial Losses
High Credits
Delts
Fraud

24. What is Franchising?
•Legal and commercial arrangement concerning the successful business of a
franchisor.
•Use of franchisor’s trade name format system and/or procedure under license.
•Means to raise capital and expand quickly
•Assistance to franchise
• Marketing, management, advertising, store design, standards specifications
•Payment by franchise by way of royalty license fee or other means.

25. History of Franchising
Singer Sewing Machine – first franchise (mid-19th century)
Automobile (e.g. Ford), petroleum products (e.g. Shell), soft drinks (e.g. Coca
Cola)
Food and restaurants (e.g. McDonald’s, Starbucks)

26. History of Franchising
Singer Sewing Machine
McDonald’s
Automobile Industry

27. Types of Franchising:
3 main types of Franchise:
Product distribution franchise;
Business format franchise;
Management franchise.

28. Structure
Franchising
Franchiser Franchisee Franchise Franchising
Classification
Domestic International
Product Distribution Business Format Management
Home Country
Kinds Host Country

29. Product Distribution Franchising
A product distribution franchise model is very much
like a supplier-dealer relationship.
Typically, the franchise merely sells the franchisor’s
products. However, this type of franchise will also
include some form of integration of the business
activities.

30. Product distribution Franchises
Examples of famous product distribution franchise:

31. Produces the syrup
concentrate
Sells the syrup
concentrate
FRANCHISEE Produces the final drink
Retail Stores
Restaurants & F&B Outlets
Vending Machine
Operators
Product Distribution
Franchises

32. Business Format Franchising
In a business format franchise, the integration of the business is
more complete.
The franchisee not only distributes the franchisor’s products and
services under the franchisor’s trade mark, but also
implements the franchisor’s format and procedure of
conducting the business.

33. Famous Examples

34. Outlet in
Sale, Australia
Business Format Franchising
Outlet in
Marseille, France

35. Management Franchise
A form of service agreement.
The franchise provides the management expertise,
format and/or procedure for conducting the business.

36. Famous Examples

37. Why is franchising important to
Leveraging on a recognized brand name
Enhancing business image
Ensuring consistent quality
Attaining higher productivity/better motivated staff
Access to good locations
Economies of scale
Reducing risks of failure
SMEs?

38. Classification of Franchising
Franchising is classified according to its Function Into
Following two categories
• Domestic Franchising
•International Franchising

39. Structure of Classification
Franchising
Domestic International
Home Country Host Country

40. Diagrammatical Representation
Domestic International
Franchising
Franchiser Franchisee Franchisor Franchisy

41. Merits and De-Merits
Establish
Market Name
T H R
Time Saving
Environment
Technology Formation
License Fee
Sharing Profit
No Name
Local Business Effected
No Innovation
Dependent

42. Thanks