Small businesses were largely neglected during the early 50s and 60s and only went on to attract attention as the whole world moved towards becoming industrial economies. Their importance actually started being recognised during 70s and 80s, when it grabbed the attention of governments and even of large corporates.

But challenges remain and only the nature of these change with the times. This remains the most vibrant sector within any economy, and for it to remain that way it demands discipline and loads of hardwork. Benny Lewis, an author and a travel enthusiast, made a very valid statement once. He said, “The difference between a stumbling block and a stepping stone is how high you raise your foot”.

The same holds true for small businesses as well, and they need to overcome the many stumbling blocks in their way to stay ahead in the race. Every industry has its share of challenges and SMEs cannot be immune.

As more SMEs participate in the mainstream economy they create employment opportunities and contribute significantly to a country’s GDP. In my opinion, raising awareness and how they contribute to the national economy is of utmost importance in order to realize the bigger picture.

However, of the several challenges faced, first and foremost is the availability of finance. There are several funds and now many banks have also started supporting the sector by providing different financing options... but more needs to be done in this space.

The other important facet is creating sound laws for the sector that will in turn lay the foundation for the future. That includes the litigation framework, which could be a stumbling block while start a business. The other one is the bankruptcy law which must be transparent and clear for SMEs in order to protect their business.

Other areas to be addressed include better transparency in licensing and registration procedures, apart from clarity in contracts and protecting their rights. These are some of the basic challenges that need attention.

And how does one go about resolving them? Banks should offer customised propositions and product offerings to address the ever growing needs of the SME sector. They have a very critical role to play in developing tangible solutions. The involvement of the central bank is also crucial as they energize the market to create a healthy investment ambience.

SMEs and banks actually complement each other and to grow in their own ways. SMEs seek to obtain finance to grow their business and on the other hand banks can capitalize on the future potential of this ever growing sector. The market therefore will become more competitive. This will also enable SMEs to choose from a wide array of financing options.

The majority of large companies tend to outsource their functions to SMEs. This is primarily because of the cost-efficiencies and specialisation SMEs bring to the table. Indirectly, the competitiveness of large corporations also depends on the performance of SMEs.

Today, the UAE nationals have shown considerable interest in becoming self-employed and launching their own SME bandwagon. This enthusiasm will develop as people become more aware and understand the sector better. The success stories of these entrepreneurs need to be showcased to give prospective ones the confidence to take the plunge.

Many other challenges can be debated upon, but to sum up, the key underlying issues SMEs face is the difficulty of access to funds and transparency in laws. I believe these are changing and it will be a smooth journey for SMEs in the long term.

Government bodies and financial authorities in the region are already doing their bit. SMEs have come a long way and are here to stay — their growth must definitely be supported. A challenge only becomes a hindrance if one succumbs to it.

— The writer is the Managing Director at Dulsco LLC.