Abstract:
This paper discuses the basic managerial deficiencies of Small and Medium Enterprises
(SMEs) in Sri Lanka with special reference to the SMEs in Ratnapura District. The study is
mainly based on primary data gathered from 57 of SMEs, which were selected from 287
SMEs using stratified random sampling method. Data was gathered using a structured
questionnaire and interviewing labourors, officers of various SME supportive organizations
and observing SMEs. The study was supplemented with the data collected from secondary
sources as well. Data was analyzed using qualitative and quantitative techniques.
The study found that even basic management functions like planning, organizing, staffing,
directing and controlling are not properly practiced in most of the SMEs. Most SMEs do not
have clear plans for future development, production process, marketing, financial activities
etc. Owners (entrepreneurs) of most of SMEs act as managers handling all the
responsibilities, which are not delegated to others. Therefore, most of the SMEs do not
function efficiently due to the delay of decision-making process, poor organization, poor
staffing, weak controlling and directing. Financial management of most of the SMEs is
found to be very weak. Most SMEs do not calculate total expenses, total revenue, profit etc,
for they do not keep any account systematically. Most SMEs do not provide any welfare
facilities and retirement benefits like EPF and ETF to encourage labourers. Poor production
planning and production process, weak practices of marketing and poor quality of the
products are the other deficiencies of SMEs. Performance of many SMEs is very poor due
to the deficiencies in management. Poor knowledge in management of entrepreneurs
causes the managerial deficiencies. Therefore, SMEs cannot judge problems and barriers
coming from internal and external industrial environment. The paper concludes that the
growth of SMEs can be accelerated by developing managerial knowledge of entrepreneurs
of the SMEs.
