How many multinational companies have originated from Pakistan? There may be a few; but not many can name more than two. Google “Pakistani multinational companies” and you would see a list of foreign multinational companies operating in Pakistan. None of those companies originated in Pakistan. Why has Pakistan failed to produce a single globally renowned multinational company? Why haven’t our SME’s grown exponentially like McDonald’s, KFC, Levi’s, and Samsung? We have largely failed in manufacturing, as well as the service sector including technological startups. While there are innumerable reasons for such abysmal performance on the business front, a few have been highlighted in this piece.
It is an irrefutable claim that the majority of small Pakistani businesses do not maintain proper accounting records. That leads to multifaceted problems. First and foremost, if you do not know your number, you do not know your business. It is that simple! The numbers tell a story that is not open to interpretation. Business is either doing well or it is not. People think they know their numbers; most entrepreneurs are surprised when they see the financial statements of their business for the first time. Numbers are the fundamental diagnostic tool of any business. Many entrepreneurs think their business is in profit when in reality it is not. Cash flows maybe positive which leads them to believe that financial performance of their business is satisfactory. In addition, external capital in the form of loan or equity is inevitable for any business to expand. A major reason for the below par growth of small businesses is lack of access to capital. Would an investor invest in a business that does not have proper accounting records? The answer is obvious. There is only one cure to this multifaceted problem: maintain your books.
The most common trait among Pakistani entrepreneurs is their unwillingness to partially concede control of their businesses to employees. The tendency to micromanage the affairs stymies the growth of the business. Micromanagement diverts the focus of business owners from long term goals to small issues that could be managed by employees. Trying to micromanage is counterproductive for any business. Business owners in Pakistan prefer to trust their descendants rather than professionals. As evident, they would prefer their inexperienced son or daughter to take control of the business instead of handing it over to experienced and qualified professionals. This behavior is one of the fundamental reasons why we have not been able to witness one renowned (there may be a few, but none are renowned) multinational company that originated from Pakistan.
It does not take a genius to follow the business models of successful multinational businesses. Could Samsung become a global brand if it was micromanaged by one family without maintaining proper accounting records? For starters, foundations must be strengthened by analyzing the numbers and building a team of leaders through delegation of authority.
