Small Business Owners Are Known To Be ‘Tough’

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Usually a number of of the next could be there before the failure of the owner manager of a small business. Lack of financial and human resources: Having less financial resources for some lesser extent has its root in having less financial know-how. Most SMEs didn’t know that there were various sources of finance opened up to these to take advantage of the Government i.e. the data gap .

Nonetheless, where there is some amount of contributions what they got was not enough. 72,000 about 41,500 Ghana cedis was disbursed to 1 1,400 small businesses in Ghana . This was not if you have big vision enough. Improper financial management practices: Growth comes with so many obligations including hiring new staff, premises, increase stocks and perhaps raise loan for expansion and so forth. In the situation where these financially aren’t properly managed, it results in overtrading, overstocking or under stocking leading to inability to meet customer needs. This is found to lead to lack of sales, revenue and the firm’s failure to service the loans which can ultimately lead to the demise of the firm.

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No collateral as security for loan: banks in Ghana require collateral as security before financing is processed for just about any business expansion in this instance. These collaterals come by means of houses and land which a few of these owner-managers cannot provide. Land ownership or tenure in Ghana is considered a prestige usually owned by the whole extended family.

This makes utilizing it as a collateral not only difficult but also impossible if one cannot get the consent of the entire extended family. Inadequate financial management skills in conditions of control and leadership i.e. no financial know-how: this was also to be blamed. Recall that about 30% of owner-managers said they had never contacted a banker to evaluate the prospect of growth of their businesses.

Actually; it was ignorance of what benefits financial management may bring to the business. Thus they were reluctant to consult with a specialist for free aside from to cover the services of a consultant to help turn around the business financially to keep the business running in the system.

Not applying the relevant financial management strategies: That is to state that the majority of the SMEs were found never to pursue the strategies or tactics needed to flourish in the market. Following same process of not using the relevant source of financing, the financial strategies are regarding the overall eyesight and objective of the business. Poor financial planning: Financial planning is of great importance to any firm whether it’s short-, medium-, or long-term.

There was evidence of poor financial planning within the SMEs in Ghana. In some full cases, this led to them lacking opportunities from delivery of equipment for the company to not able to meet other important financial obligations therefore hindering the growth opportunity. The reasons because of this are insufficient knowledge in financial management and the perceived differences between SMEs and large organisations amongst some owner-managers .

Insufficient financial management, financial controls and financial monitoring systems: as talked about in the books review , merging sufficient financial management,financial controls and monitoring effectively was found to help SMEs in their development quest. Where these were deficient, SMEs failed to maintain their growth as expected. Inadequate marketing skills, lack of customer orientation and limited distribution stations: most of the small owner businesses lack proper marketing and customer support skills as every informal observer in Ghana can attest to that. The question of customer service romantic relationship is not popular with the Ghanaian business community generally and the tiny business enterprise specifically.

The reason is thought to stem from the culture and the idea that “you go to buy because you are in need”, thus creating the impression that owner is doing the buyer a favour and not vice versa. An proof supplier power to some extent. Things are now changing gradually, anyway, due to introduction of marketing classes in secondary, colleges and tertiary education curricula.