CASH STRATEGIES OF SMALL AND MEDIUM ENTERPRISE (SME)


 


      Small and Medium Enterprise (SME) are literally Small and Medium business that has a certain limit or qualification, depending from various countries; a business can be considered as SME if their revenue does not exceed to a certain amount as expected by the government, if there are limited numbers of assets and employees just like in the USA and Europe. Also in Canada a company is considered an SME if their employees are less than 100. It is easy to look at the business to see if they are small and medium enterprise because usually they have not established their many branches and usually they have a limited market distribution but then again SME to be considered may vary according to their countries definition.


      In many countries SME’s can be considered as the backbone of economy since there are more established SME than giant corporations and businesses. SME’s can start at home it can be a family business, a single proprietorship, partnership in other countries it may even be a corporation as long as they do not exceed the qualification within the threshold they can be considered SME. This business may even start from scratch or from idea of a certain person, if they have a proposed business plan or basic needs to carry on the continuity of their desire they just have to start in any way possible even if they have a limited capital.


      Start-up business can usually do the following strategies to gain a cash-flow usually they USE THEIR OWN MONEY to develop their business in a modest way just like in a “Restaurant” that is built in the entrance or parking space of their home. They can BORROW MONEY FROM THEIR FRIENDS AND RELATIVES to gain the cash flow that they need. Or they can BORROW FROM A LENDING COMPANY or institution to further increase their stocks, they can also seek fro ANGEL INVESTORS or neighbors who can give money without conditions but to help them to grow, they can make PARTNERSHIP FROM OTHER PEOPLE for a division of earnings which is hard to swallow but it can be a good start. These are the basic foundations of SME who started from scratch but has become successful indeed.  


      When their business has grown and they have established expected sources of income coming from their business this time they are ready to jump for a more serious money making opportunities and business expansion. Establishing a cash flow or cash strategies is not that easy but it is not that hard for the SME’s if they have already gain a bit control. The best way to gain their cash-flow is through RETAINED EARNINGS, this means that what you earn from your small business should be added to the business itself rather than personal withdrawal, this is probably a zero risk plan if a certain business revenue is carry on to expand the business.


      If Retained Earning is still not possible SME can seek loan from the Government by presenting your Small Business. In the US the Small Business Administration (SBA) can grant GOVERNMENT LOANS to thousands of Small Business they can even give a short training to even increase your knowledge in business and for personal growth. Although it is not easy to get a loan and it may require various documentation and investigation from your business it is still worth to try, you may also seek from your local county about the government loan or from other Countries you can visit your Municipality and Local Government Unit to find out if they provide such loans and to find out if you qualify. http://www.sba.gov/category/navigation-structure/loans-grants.    


      There are still many cash strategies that SME can look forward to they can even seek for BANK LOAN or MICRO ENTERPRISE DEVELOPMENT LOAN, SME COOPERATIVES, MICRO-FINANCING and other lending authorities. But before they do this, they must choose a bank or institution that they can trust they should also consider fair practices and banks that are highly strong and established to prevent such risk of liquidity. If banks are stable they usually offer a minimum or less interest for the benefit of the creditors. In return, creditors must pay the exact amount that they have borrowed they should also pay their interest on time to gain respect and longer partnership and fair business relationships within the banks or lending institutions.  


      Another cash strategies that they can do is SELLING THEIR ASSETS, although it should be well thought of many times and the decision should come from the family or business partners because it entails quite a risk this decision can add up to opportunities when the money is used for business operation. Imagine selling your car or a piece of land or building? But if all decision makers are confident about their business, they need not be afraid to jump into the unknown and prepare themselves for a ride. Sell your asset if you must, you will regain your investment if you really persevere in your business then it should work just fine. Taking the risk and controlling it makes a big difference in business.    



Credit:ivythesis.typepad.com


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