ABSTRACT
Small & Medium Enterprises are considered as a growth engine for developing economies. Importance of this sector cannot be neglected due to its utmost significance and contribution towards GDP growth and employment generation. SME sector in Pakistan is facing number of problems which acts as a hurdle in their growth. Major obstacles in the growth of SMEs include financial constraints, regulatory and fiscal constraint, infrastructure constraint and human resource constraint. These four factors are deteriorating SMEs growth in Pakistan. Sample firms have been selected from trading, manufacturing and services sector of similar size and capacity. Problems faced by SMEs are dimensions of the pointed out four major obstacles.
Lesser technical and professional training of owners, difficult entry into the business, high rents of business premises, high cost structures, high average credit collection period and power shortages are key issues that have been reported by entrepreneurs. Other problems include lack of formal books of accounts, accounting training, computer usage, bank accounts, awareness about banks loan products, low loan acceptance ratio, the excessive government regulations, the hostile taxation authorities, competition from Chinese products, lack of technical and vocational training facilities and poor roads and communications infrastructure. Various dimensions have been revealed in this study that affect growth rate of SMEs. It has been identified that regulatory constraint and infrastructure constraint are key obstacles to growth of SME sector. Future research study can be conducted by calculating financial losses to individual firms and country in general due to obstacles faced by SMEs.
INTRODUCTION
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Why and how do policy-makers and practitioners intervene to encourage new firm formation and development?
Currently all the small business houses or the SMEs are praising the support of commercial finance companies all over the world. Mostly these financial organizations are established to provide loan or financial support to a variety of business needs to commercial customers. They have no provision for the general people as they only target business clients. Ranging from small retail stores to the manufacturing firms can obtain loans. Professionals like doctors, dentists, lawyers, etc can also apply for loans from these lenders to expand their in-house business.
In the article, "Strategies for Enhancing Small-Business Owners' Success" by Susan Turner and Al Endres, it is claimed that there is no specific reason as to why small businesses are failing in today's America. They believe, however that two factors can cause the demise of small businesses. These factors are small business financing and the marketing plans associated with those businesses. Small business owners are finding it increasingly hard to acquire funds to start up and help maintain a foothold in the business world. The authors state that this is due to the rising risks of propositions for investors and acknowledge that small businesses have to resort to using their own resources such as their own funds and bootstrap financing. Another
...omy. It must be very difficult but some measures are required in order to reduce diversification of production and corruption inside the business, and to let small and medium businesses grow.
Thesis: Businesses deem financing necessary when they are just beginning, expanding, or recovering; Debt financing and equity financing have many advantages and disadvantages but also change the entire accounting method that is to be considered while running the business. Debt financing has both advantages and disadvantages. Debt financing is a business’ way to start up, expand, or recover by borrowing money from a person or company. The money borrowed has to be paid back along with the interest that was accrued during the length of time the loan was carried out. This option is great for company’s that do not want investors.
In this report, discussions aim to assist an Irish SME to optimise its analysis and assortment of the BRICS countries (Brazil, Russia, India, China, and South Africa) - the developing or newly industrialised nations. The term ‘company’ herein mainly refers to small and medium enterprises rather than the large international enterprises. Besides, the exporting aspect is the main concern in this context. Furthermore, the entry mode to each market is presumed to be the subsequent decision of a company after identifying the market. Thus, it would not be covered in this report.
A country's economic environment plays a significant role in the success of businesses operating within that country. Countries with struggling or shrinking economies were not included in the top ten ranking. Economic indicators and trends selected for this analysis:
Adelman, P. J., & Marks, A. M. (2010). Entrepreneurial finance. (5 ed.). Bedford, Texas: Prentice Hall.
Incorporation of SMEs and International companies to better define, penetrate and gain access to both local and international
These factors encourage the SME to seek a non EU market and a central location where it can gain advantage from a lot of
In conclusion, a precise and more appropriate definition that reflects the size, the nature and needs of SMEs is essential and advantageous not only for a particular SME itself, but also for policy makers and supporting agencies in planning and nurturing the proper growth and development of the SMEs sector in Malaysia as a whole.
Small, medium enterprises (SMEs) are largest types business in the world, making up an estimated 99.7% of business. According to the Federation of Small Businesses (FSB) there are nearly five million existing businesses in the UK as of 2013. SMEs are a key contributor towards economic growth in terms of creating more employment, stimulating innovation and promoting social unity. SMEs are responsible for 47% of private sector employment, yet despite such global present there is still no agreed definition of a SME (Storey 1994). Bolton (1971) attempted to define them through a statistical and economic analysis. Classifications which are based on criteria, such as number of employees or annual turnover, however, do not remain consistent across borders. Given their size, smaller companies tend to be more intent on survival rather than expansion and profit maximisation. Smaller sized firms have always felt that the current reporting framework for IFRS is tailored more for the needs of larger companies and that the heavy cost burden it imposes upon them may not be entirely justified. In response to these concerns, the IASB subsequently issued the IFRS for Small and Medium-sized Entities (IFRS for SMEs) in July 2009. This standard offers an alternative framework which can be adopted by entities in place of the already extant full set of IFRSs or local national requirement standards.(Holt 2010) This essay will critically evaluate the impact of the IFRS for SME’s and whether or not it stands as the most suitable framework available for SMEs to use.
Small businesses have been considered the mainstay in countries around the world. In many European countries for example, the small business has been considered crucial to the success and flourishment of the country in general. Most individuals start upon a small business venture in the hopes of realizing ownership, independent profits and personal success. Small businesses can prove extremely successful when planned properly. Studies suggest that several small businesses, however, close or fail within the first few years of operation. This failure suggests that a majority of small business owners may not have as yet realized the crucial success factors necessary for successful implementation of a small business.
Access to capital and credit at various stages in the business life cycle is identified as the major hurdle by the entrepreneurs. For many small firms and most start-ups, the personal funds of the business owners and entrepreneur and those of relatives and acquaintances constitute as the major source of capital. For many small businesses, especially during the early years of their operation, credit is simply not available. For many others, the limited available credit is not through bank loans. Due to this many of them rely on multiple credit card balances and home equity loans as major sources of credit for start-up firm. Because banks are bound by laws and regulations to prudent lending standards that require them a risk management assessment for each loan made. These regulations were made more vigor during the late 1980'' and early 1990 . Banks always found that lending to manufacturing firm with hard asset such as property, equipment, and inventory has always been easier than lending to today's expanding service sector firms. Because the service sector firms own few hard asses, therefor lending judgment have to be based in terms of character, markets, and cashflow, which make it difficult to the bank to meet the regulations for the approval of the loan. Additional, the banking industry, as well as the entire financial sector of the
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