Small and Medium Entreprises Challenges

The Most Critical Financial Challenges Among SMEs In Malaysia

Small and Medium Enterprises ( SMEs ) represent an important sector of Malaysia where the number of SMEs have been increasing from year to year. With the number of SMEs that much , the success of SMEs are likely to boost the economy . SMEs in Malaysia often assisted movement of various aspects such as finance, marketing, advisory services and others to continue to grow and contribute to the country. While the attention of the Government , SME views are still struggling to meet the challenges in the financial aspect .

SMEs are usually driven by the owners , assisted by some low-skilled workers . Normally , SMEs focus more on operations such as processing , production , marketing and distribution. The financial aspect is not taken care of properly , causing SMEs often do not develop well despite being in operation for many years . SMEs do not emphasize the aspects of recording financial and cash flow provide operating cost information thoroughly. Projections and profit margins are not managed well cause SMEs still maintain the status quo . SMEs also have no savings and investments to move them to the next level . This weakness indirect difficult for SMEs to plan and develop

Increased costs that occur each year are able to sue SMEs. With a large number of SMEs and a lot of similarities between their businesses , SMEs should be aware that quick action could save their opportunities . SMEs must constantly seek opportunities to increase business and reduce the cost of production and operations. To face the challenges of an increasingly high , SMEs should use technology to increase efficiency . However , the financial position may be a major obstacle to the ability of SMEs in the use of technology. Without technology , the high demand for SME products had to be released because there was no power to meet demand.

That lack of capital is an element that we often hear when talking about SMEs . Capital funds offered by SMEs are often not enough. SMEs, especially micro and small often face problems when dealing with banking institutions to obtain financing . Negative perception of banking institutions on their ability to manage finances is leading to their inability to provide financial records , the absence of collateral , the business is not viable , there is no record of loan performance and so on . With high risk , banking institutions offer loans with higher interest rates than loans less risky medium sector . With high interest rates , micro enterprises are faced with a capital injection to start a business while small companies is difficult to develop. Lack of funds for micro and small sector is trying to overcome by the Government through the provision of funding through government agencies and non-governmental organizations ( NGOs ) . Financing with low interest rates were channeled to help micro and small sector continues to grow . However , with limited funds , this fund shortage problem can not be solved.

SMEs should also be brave to face changes in the operation. Any inefficiency must be improved to ensure cost effective . SMEs should consider outsourcing ( outsourcing ) in its business processes if it is more beneficial to them . Through outsourcing, SMEs can enjoy a lower cost of sales , the use of more efficient distribution channels apart from a greater profit margin . SMEs should always explore every available opportunity to reduce production costs . SMEs have to optimize profits by minimizing costs.

SMEs need to constantly evaluate their strategies in order to remain on the market . With the situation increasingly open economy , SMEs will face more intense competition. For example , the presence of retail giants such as Tesco and others are able to change the landscape of the retail sector in certain areas. For SMEs involved in retail, their position will not only be affected even able to finish their business . Low competitive ability of SMEs will lead to increased operating costs . SMEs need to consider options that fit like changing locations or to remain competitive by providing special services to customers.

In conclusion , SMEs in Malaysia need to improve financial management to ensure the development of their business is not affected . SMEs must change and move quickly to enhance their contribution to the national economy.

The Impacts Of Insufficient Funds For Capital For SMEs Development

SMEs have a major role in driving economic growth. With a large number of SMEs are able to act as engines of economic growth. With these important roles, lack of capital funds for SMEs certainly made a huge impact on their development. It will definitely slow down and so will affect the economy. Lack of capital funds will impact the following: