January 10th, 2018
Strategic Financial Management in Small and Medium Enterprises – conclusion
SMEs face various financing challenges that make them susceptible to failure during economic crises. The concern of the current paper was to highlight these challenges and evaluate strategies that alleviate the challenges and those that prepare SMEs to cope with economic crises. Challenges faced by SMEs include their lack of access to public markets to source financing and high requirements that restrict the amount of financing they can acquire from lenders. Such challenges may arise out of information asymmetry existing between lenders and SMEs. To manage such challenges SMEs thus need to embark on establishing strategic-planning systems that guide their operations. Additionally, establishing cost controls in areas such as material purchases, production and staffing may help SMEs make savings that alleviate their financing needs. Similarly, activities such as research and development aimed at product diversification can help such entities reduce operational risk in times of crises. Finally, separating ownership from management of the entity may help the entity’s establish prudent practices that help it to acquire higher amounts of credit from external lenders.
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