SMALL BUSINESS MANAGEMENT

Small Business Management

SME-SMALL AND MEDIUM ENTERPRISE

Introduction

Depending on the country, the term small and medium enterprises (SMEs) has acquired a different meaning. However, there is still no general definition in this regard. Most often, these companies are classified according to their income and amount of annual turnover. It also takes into account other factors such as size, turnover, number of employees and balance sheet. Small and medium enterprises (SMEs) are independent businesses that are usually managed, funded, and operated by their owners, and with staff size, financial resources, and assets comparatively limited in scale.

Small and medium businesses are the most common form of organizing business worldwide. They are collectively referred to as SMEs, the most common quantitative measurement for defining an SME is 250 or fewer employees. The legal structure of SME may vary from country to country and include informal, semiformal, or recognizable formal legal enterprises. The impact of SMEs on national employment numbers and gross domestic product (GDP) per capita does vary across countries. In most countries, SMEs dominate the business landscape.



Investment Readiness

The Term Investment Readiness means that a Business is in a reasonably good condition to present its business to the investors and meet their Requirements for their investment decisions.SMEs need to become "investment ready", if they have to meet investor needs.

Many entrepreneurs need special guidance to make any sort of investment in to the business sector. A good investor is one who implements the policies and measures to determine Gaps and development investments for programs to help SMEs understand Financing options, assess their business strategy, structure their business plans and management of a proper equity financing.

There should be a proper kind of Support for innovative small and medium-sized enterprises to create and develop a proper business setup.SMEs are considered to be a high priority in business because they are the main driving force of innovation, economic growth and job creation. The recent increase, reaching new record in 2005, has been an actual investment fund for the SMEs.

The business investors are reluctant to invest huge amounts of capital because of the high risks and indirect costs involved in the small and medium enterprises .apart from this factor, many entrepreneurs also have limited understanding of the various Financing options, that is why they think a lot of times before making any sort of investment into the SMEs Schaper, Volery, 2004, pp23).

The growth of venture capital for SMEs Although bank loans are still an important source of SME financing, equity financing becomes necessary in a business a certain stage of development. In the early stages, for example, debt financing may be due to the flow of small and medium enterprises and limited income can be used as collateral assets are not appropriate. In addition, the loan principal and interest payments as a business may be difficult to be handled.

SMEs with growth potential provide equity financing to strengthen its balance sheet and unlock the advantage of access to bank ...