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Staying afloat

For some time now, businessmen have been complaining about the slow turnover of business and the consequential decline in profits; both of which threatened the development and existence of their enterprises.

It would seem that this fate has for the most part fallen on the doorsteps of micro, small and medium enterprises, which are forced to compete with the large conglomerate and franchise operations.

These micro, small and medium enterprises are constantly under immense pressure, primarily because of their inability to command a reasonable market share. Currently world trade agreements make it almost impossible for smaller businesses to survive in a trading arena where there is fierce competition.

In the wholesale and retail business, the large companies are in a position to source their goods and services at cheaper prices, and are therefore able to undercut the competition. It is known that many of these large corporations also have a number of subsidiary companies, which are able to supply them with goods and services at cheaper prices. The alliances which the large companies enjoy place them in a unique position to absorb losses; a luxury which small and medium enterprises cannot enjoy.

There are however some large companies that have fallen victims, to which the blame has been attributed to the prevailing economic circumstances. In most cases it would seem that bad management, embezzlement, fraud and other illegal financial schemes have contributed to some of the well known publicised failures.

It would appear that large businesses have found workable solutions towards ensuring their survival. Mergers, restructuring, and downsizing of operations have been some of the options that have been explored. These are measures of comfort that large enterprises have over small and medium enterprises.

There will always be the ongoing discussion as to why the larger enterprises tend to succeed over the micro, small and medium businesses. Business development personnel, financiers and other sector personnel will all provide various reasons, but from a layman point of view, the answer seems rather straight forward.

To begin with, micro, small and medium size enterprises remain disadvantaged when it comes to securing finances to maintain and develop the level of their operations. Secondly, they are often seen as too small to be embraced by larger operations, who believe that they bring very little to the table which can be considered as value added. Thirdly, because of size and limited financial resources, these small players cannot invest in engaging professional management, sales and marketing and accounting personnel.

It is sad to state that they have to depend on state agencies for financial and technical support. It would appear that the requirements of these agencies of the micro, small and medium size businesses to satisfy the eligibility criteria for assistance, offer little or no hope to those who are desperately in need of help.

This apart, it requires that solutions to the dilemma facing micro, small and medium businesses must be identified. The options of entering into partnerships and collaborative business ventures are but two, that are opened to these businesses.

It would seem that a lack of trust and the fear factor are barriers that retard the taking of risks by owners and managers of micro, small and medium size enterprises. Since business is about risk taking, this signals the need for more visionary management. Where this is lacking, there is every possibility that many enterprises will not develop and/or survive.

* Dennis De eiza is a Labour Management Consultant with Regional Management Services Inc.

Visit our Website: www.regionalmanagementservicesinc

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