Advantages And Disadvantages Of Small Business Enterprises

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According to Malaysian SME annual report (2005 & 2006), small business enterprises or known as SME have been recognized as the strategic thrust in Malaysian economy and is a very important segment of the Malaysian economy accounting for 99.2% of total business establishments. SME also providing employment for about 56% of the total workforce and contributing about 31% of gross domestic product. Small business enterprises can be grouped into three categories which is micro, small or medium enterprise. These grouping can be decided based on two aspects either the number of people a business employs or on the total sales or revenue generated by a business in a year. In Malaysia, to identify the small business enterprises in number of people a…show more content…
According to an economist,Harvie (2004), small business enterprise sector has a crucial role to play in the sustained recovery of the region arising from the business opportunities created by the restructuring process itself the movement towards closer regional economic integration, advances in information and communication technology (ICT). Since the year 2007, the world economy faced some unfavorable events called “boiling oil prices” and also sub-prime credit crunch which turns to be a financial distress to the financial market. Ever since the phenomena, most of the industries showing some changes that affect the industries such as diminishing economic growth and increasing the costs of production, which means that the recession cannot be avoid. The common reasons of a recession are lower expenditures by the consumers, job cuts, lower productions and also lower demands for products and services. Small business enterprises has to faced two common challenges here which is lower cash flows and limited financing and luckily they able to through this crisis better than large enterprises…show more content…
More than half of the small business enterprises in the world are stifled because of poor financing and other associated problems. The challenges in financial part for small business enterprises are they may not have enough sources of funds but its accessibility. According to Harper.M (1984), he believes that the capital shortage problem in the small firm sector is partly one, which stems for the uneconomic deployment of available resources by the owner-managers. This financial problem occur due to the inhibiting funds accessibility are the stringent condition which was set by financial institution, lack of adequate collateral and credit information and also cost of accessing
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