Problems of small Entrepreneurial firms operating in Pakistan

The purpose of this paper is to analyze the impact of different factors such as tough competition, lack of credit availability, lack of fiscal incentives, technological change, rising costs and customer's satisfaction on small entrepreneurial firms. Another objective is to investigate how small entrepreneurial firms are operating in competitive environment without support and financial incentive from the government. This study is quantitative, in which we used primary data collected from 200 owners of small entrepreneurial firms operating in Multan city of Pakistan through a structured questionnaire. Five points Likert Scale was used to measure the attitude of respondents. The questionnaires were filled during face-to-face interview with the respondents. The sampling population was small entrepreneurial firms operating in Multan City, which is one of the biggest city of Pakistan, having population of about 1.8 million. The findings of our study show that Banks are reluctant to lend loans to small entrepreneurial firms having weak financial position. Another factor noted during the study was the location that plays important role because good location provides opportunity for accessibility and parking. It becomes easy for owner to access customers, suppliers and employees. Lack of required capital is another factor that prevent small entrepreneurial firms from using latest technology and improve the quality of products. The level of productivity of small entrepreneurial firms is also low because of the shortage of energy and unscheduled load shedding. It is, therefore, recommended that the government should provide tax incentives, infrastructure, loans to small entrepreneurial firms at low interest rate so that they can use latest technology, and improve quality of their products. This study has practical implications because the sampling entrepreneurial firms have been facing the same problems as the small entrepreneurial firms are facing in other developing countries. The results of this study can easily be generalized and the researchers and policy makers of other countries can take benefit from them. It is the first study conducted on small entrepreneurial firms operating in Multan city of Pakistan.