BACKGROUND
Small or medium-sized enterprise (SME), of which definition varies in different countries and different economic development levels, normally is known as relatively small business unit in terms of employees, capital and operations scale in compared with large enterprises in the same industry.
In spite of the diversity of its definition, SME plays a crucial role in almost every economy, tremendously contributes to economic development, job creation, and social stability. According to Popa (2012), it becomes a common place to speak of SMEs as an engine of economic growth for any European Union country. Actually, the saying is not only limited with European Union country, but also works in almost every country, the data from the Chinese statistics department shows that the number of SMEs takes 97.2% of the enterprises in 2011.
In the process of SMEs development, money need to be invested to innovation and marketing for keeping its competitiveness under the circumstance that the labor-intensive economy are shifting to innovation-oriented economy, capital increase ensures the SME running normally and even grows to large enterprises. Without the external investment, the SMEs’ own profit accumulation amount can hardly meet the capital increase demand in most of the cases.
According to the well-known economic theory, the more investment being put into the business, the more profit it produces, and as the business develops, the yield rate slows down. And the yield rate of the developing SMEs is much higher than the large enterprises’ since there’s already large amount of capital available for the large enterprises. However, SMEs is not that competitive among large enterprises, government and overseas investment in the limi...
... middle of paper ...
...he efficient and diversified financing availability to SMEs cannot come true without the internal strength of SMEs and an economy environment with strong financial system. SMEs those who can take the opportunities of financing provides precondition to their development.
Works Cited
Berger, A.N. & Udell, G.F. 2006, "A more complete conceptual framework for SME finance", Journal of Banking & Finance, vol. 30, no. 11, pp. 2945-2966.
Brookfield, D (2001) “Business finance and the SME sector”
Irwin, D.(.1.). & Scott, J.M.(.2.). 2010, "Barriers faced by SMEs in raising bank finance", International Journal of Entrepreneurial Behaviour and Research, vol. 16, no. 3, pp. 245-259.
POPA, D. 2012, "Competitiveness of Romanian Small and Medium-Sized Enterprises in European Union", Journal of Knowledge Management, Economics & Information Technology, vol. 2, no. 2, pp. 63-70.
The Small Business Administration (SBA). In July of 1953, the United States Congress amended an act called the Small Business Act. Many believe that the essence of the American economic system of private enterprise is free competition. Also, that only through full and free competition can free markets, free entry into business, and opportunities for expression and growth of personal initiative and individual judgment can be assured.
There are a lot of factors that determines whether or not a company will be successful. These factors are usually derived from economics. One factor that I plan to focus on is scale economies or better known as economies of scale. Firms that have expanded their scale of operations to obtain economies of mass production have survived and flourished. Whereas smaller firms who have not been able to expand have usually ended up as high-cost producers. The topic discussed will be the Italian automotive industry and how it is affected by economies of scale.
Thesis: Businesses deem financing necessary when they are just beginning, expanding, or recovering; Debt financing and equity financning have many advantages and disadvantages but also change the entire accounting method that is to be considered while running the business.
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.
Adelman, P. J., & Marks, A. M. (2010). Entrepreneurial finance. (5 ed.). Bedford, Texas: Prentice Hall.
in both ends, the fact remains that SME’s are hesitant to ask for investment because of their approach
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.
Before 1980 the only way to find the investment for any startups was banks and in 1980's there were investors who were interested in technology business. In this 20th century, small and mid-sized enterprises (SMEs) have a low income and are not easy to get capital or financing from any financial institutions or bankers, but startups have an option to find their investments through a strategy called Crowdfunding, a venture to raise money from various people. This review infers the content on influence of crowdfunding in small and mid-sized enterprises (SMEs). This review emphasis on how crowdfunding is growing in SMEs, what are advantages and disadvantages of crowdfunding and a case study on how a company from Indonesia raised their money using crowdfunding.
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.
Growth in the small and medium business in Canada and other developed countries has been very significant. This sector of the business community now represents about 40 percent of GDP and accounts more than half of total employment. Today small businesses are more diverse and more vigorous than ever, but they also faces newer and more challenges or inhibitors to their growth than their older conter parts. This research will attempt to find the answer to the following hypothetical question:
There are various definitions of smaller enterprises provided from different times and areas. One of the earliest definitions was provided by Bolton Report (1971), which has indicated that a small enterprise should meet three criteria: independent (not part of a larger enterprise); managed in a personalized manner(simple management structure); relatively small share of the market(the enterprise is a price ‘taker’ rather than price ‘maker’). There are also quantitative definition of the smaller enterprise in terms of measurement of the assets, turnover, profitability and employment from different sectors and countries (Bolton, 1971).
Another study by Ligthelm and Cant (2008), in their research article entitled limited access to financial resources to smaller enterprises found out that, typically, smaller enterprises face higher transaction costs than larger enterprises in obtaining credit, insufficient
Within every major economy, a great factor in providing the energy of the core of the nations economy is the small and medium enterprises. These cluster of firms are what provide new economic activity, new innovative products and services, along with growing employment and in general a crucial system in ensuring the economy is at a stable growth level. With a majority of this activity stemming from family controlled or managed businesses, the focus on developing a global and long term perspective for these firms are ever growing in importance because of the global perspective entrepreneurship has started to take.
Definition: A small business may is a business with a small number of employees. The definition of "small business" often different by country and industry, but is generally under one 100 employees in the United States, while under 50 employees in the European Union. These businesses are normally privately owned corporations, partnerships, or sole proprietorships.
Sources of finance are the different methods for a business to earn and obtain money. There are lots of ways to obtain money but two large basic sources of finance, which are the “owner’s capital” and “capital borrowed”. They are also called internal sources of finance and external sources of finance. In those sources, they are mainly divided in two groups, which are short-term sources of finance and long-term sources of finance.