Key issues in small business enterprises|
Personal Reflective Report|
BA (HONS) Business Enterprise Development2012|
Small business enterprises are important for the modern market economy in terms of innovation, employment and flexibility. They are the backbone of our economy. Around 98.6% of all businesses are considered small (Goodman, 2006) and every large business was at some point small. Small business enterprises are very different to large business enterprises. They operate in different circumstances, such as having different management techniques, facing different financial constraints and production choices, and bearing different relative regulatory burdens. This report’s aim is to identify some of the key issues facing small business enterprises today, addressed in the Enterprise Finance unit, in order to give better view of the challenges presented in their survival and growth.
Small business enterprises are often at a competitive disadvantage to large business enterprises. They may have difficulty achieving economies of scale, where large enterprises have already been well established, they often have difficulty in acquiring sources of finance and they may have problems with government policy and regulation, which are often designed to assist specifically large enterprises (Holmes et al, 2003). Other factors that may bring to small enterprise failure include: poor credit management, poor stock management, poor pricing practice, excessive profit distribution, excessive investment in long term assets and others (Holmes et al, 2003:142). They are very dependent on the founding owners and have higher business risk.
In summary, two broad forms of business failure can be identified. The first involves the start-up of the business, bankruptcy, liquidation, voluntary wind-up/closure. The second form is where the business continues to operate, but the return on...