Question

the word economic forum as well as the global competitiveness ranking has adjuged the SMEs in the country to have declined steadily from 8.0% in 1980 to 2.2% in 2014

a) what reasons led to this dismal performance and even closure of businesses in the country?

b) what are the features an enterpreneur has to bear in mind before venturing into a business?

Answer 1

SME: Small and medium enterprises.

Reasons, why SMEs have performed poorly from 1980 to 2014, are:

1. The financial crisis faced by the global economy in the year 1991 and 2008 which made the majority of the SMEs suffer from cash crunch.

2. The reason why SMEs are growing at a poor rate is because of poor credit availability. The companies willing to expand but have limited financial resources often tend to opt for debt option but banks are reluctant to avail loans to SMEs as there are higher chances of solvency or when the loans are availed the interest rates are very high which affects their profitability and future resource planning.

3.SMEs lack the knowledge employees as all are acqu.ired by the MNCs.

4. They fail to forecast future occurrences leaving them unprepared or unplanned in unexpected economic turmoil.

5. SMEs often fail at sustaining their working capital which in turn affects their working cycle and productivity.

The features Entrepreneurs should keep in mind before venturing in business are:

1. Passionate about what he/she is about to start.

2. Foresighted about the changing environment and the possibility of unfavorable events.

3. Decision making as and when required post-analyzing.

4. Risk-taking ability.

5. Be a go-getter.

6. Sustainability and consistency.

7. Flexible enough to change with the changing technological and market changes

8. Should have in-depth knowledge about the venture he is planning to enter into.

9. Good planning and controlling skills.

10. Should know how to socialize and developed contacts by being a part of various events.

11. Should be smart enough to get into strategic alliance as and when required to grow business.

NOTE: If you need more justification on any of the given points please do comment in the comment section.