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.

References

Berger, A. N. & Udell, G. F. (1998). The economics of small business finance: the roles of private equity and debt markets in the financial growth cycle. Journal of Banking and Finance, 22(6-8), 617-673. doi:10.1016/S0378-4266(98)00038-7

He, L. (2010). On financial management for SMEs under new conditions. International Business Research, 3(4), 200-202.

Liu, Z. (2010). Strategic financial management in small and medium-sized enterprises. International Journal of Business Management, 5(2), 132-136.

Shanghai Stock Exchange. (2002). Listing requirements. Retrieved from http://www.sse.com.cn/sseportal/en_us/ps/lc/lst_req.shtml

Wu, J., Song, J. & Zeng, C. (2008). An empirical evidence of small business financing in China. Management Research News, 31(12), 959-975. Doi:10.1108/01409170810920666

Yu, X & Wang, W. (2010). On key points of financial cost management in small and medium-sized enterprises.  International Journal of Business and Management, 5(11), 177-182.

find the cost of your paper