BUSINESS

Challenges faced by the Small and Medium Sized Enterprises (SMEs)

Challenges faced by the Small and Medium Sized Enterprises (SMEs)

Introduction

As the world economy is continuously advancing towards increased integration due to the progresses in communication technology, developing countries growth, and trade barriers reduction, many supreme opportunities for small and medium businesses has been derived from their ability to participate in the international market (Sha, p.1). The policy makers of both developing and well developed countries, at local, regional, and national level have accepted today that small and medium sized businesses are playing a vital role in terms of wealth creation, employment, and the development of innovation (Sha, p.1).

Small and Medium sized Enterprises (SMEs) comprise of the rapidly growing sector of both the United Kingdom and European economies, a trend is reflected globally. The role and performance of small and medium enterprises (SMEs) is also a major part of UK economy wellbeing today (Omar & Fraser, 2010, p.2). Small and medium sized businesses have hold an immense importance to the UK economy for wealth and jobs and a dynamic, as research indicates that SMEs employ a major part of the workforce of UK. Further, the rapidly advancing SME sector is contributing and expected to continue this contribution significantly to the future productivity and growth (Chris et al, 2009, p.3).

Thus, the small and medium sized firms' role in UK business market has been developed greatly and they are playing an important part in different business aspects. However, these small and medium sized firms are also facing various challenges posed by growth capital, economic recession, management constraints, and others. This paper is focused on highlighting all the major challenges small and medium sized businesses are facing in UK market today.

Discussion

Similar to other sectors of UK business market, there are certain challenges pertain to the dev elopement and growth of small and medium sized business firms. Some of the major challenges faced by SMEs in UK marketplace are as follows:

Financial Challenges

Like all other businesses, SMEs also require financial resources in order to begin trading and to fund growth. Therefore, the lack of this financial availability can be the constraint on SMEs' business growth and development (SBRC, 2008, p36). The gap between growth capital demand and supply is major financial barrier that SMEs are facing today. According to current data analysis and research it is evident that a gap in provision of growth capital exist and this unmet demand is majorly the effect of recession that has weakened the balance sheets reduced the capacity to take on debt (Chris et al, 2009, p.3). Research suggests that 25000 to 32000 businesses of UK are rising and restructuring and with features that can make them suitable for growth capital. The research analysis suggest that up to 5000 of these business per annum will be viable small and medium sized enterprises which are expected to experience significant issues in accessing capital as the economy emerges from recession (Chris et al, 2009, ...