Factors that affect the growth of small and medium businesses

Like every business, small and medium businesses need to achieve success but there are many factors included in the process of growth of these businesses. Each entrepreneur possesses a different theory for growth, but since there are some common factors responsible for the success of any kind of business. All the decisions made by an entrepreneur of the small-medium enterprise are not only his natural instincts but also includes some strategic planning and some simple formulas. Below we are going to discuss some of the crucial factors which play an important role in the development and growth of small and medium enterprises.

Government Policies

SMEs are very much important to the economy of any country and therefore it is really necessary that the government policies should give support to them. The government policies should be in such a manner that it helps small and medium businesses to work smoothly and efficiently. It should be able to remove the barriers from the road of growth and development of SMEs. However, now the government has introduced supportive and promotional policies which have started providing help and encouragement to small and medium businesses.

The Competition

The small and medium businesses enter the competition so that they will be able to search their own competitive advantage that is highly responsible for the success of any SME. There are many factors that are responsible for the development of the enterprise as well as in improving the quality of the product and services provided by them. It includes knowledge of market, innovation, operations of a business and sensible investment. Nowadays because of the globalization and increasing trade SMEs are getting new chances for developing themselves. Because of Free Trade Agreements, the competition is increasing on the international level also.

Global economy

SMEs are an important factor for the industrial development of any developing country as it provides finance and enhances the growth of its economy. But in developing countries small and medium enterprises have to face many problems. Small and medium enterprises employ about 60% of the workforce in the private sector, and it has been playing an important contribution to innovation and development. It lends support not only to the regional as well as national growth.

Conclusion

Many factors are responsible for affecting the growth of small and medium businesses. Amongst all of them, the availability of finance is the most important factor which has been playing a crucial role in their development. The government is supporting small and medium business in gaining smooth and uninterrupted flow of finance, but still, it needs some time and some more effort to get developed.

Originally published at www.ofbusiness.com.