Essay: The Failure of SMEs

Sample Essay

The failure of SMEs is inevitable if these problems are not identified and addressed with a high priority. The best way of analysing problems in a situation or business is to review problems in a similar business. This would not only help in identification of problems but also help in prevention of activities which lead to financial trouble and eventual failure. One of the main problems which cause SMEs to collapse is lack of financial control.

Thomas Chippendale was a famous cabinet and chair maker who sold many of his creations to high paying customers and generated a large amount of revenues but due to lack of financial control he was unable to make his business profitable. Another significant problem is the implementation of outdated and obsolete financial management systems. Companies tend to outgrow the financial management systems with the passage of time and the initially implemented financial management system is rendered useless. Pekarna Pejac is one of the largest producers of bread and pastries in Slovenia and employs almost 230 people. The company was initially launched as a family run business and the company experienced major problems as it tried to implement several alternative financial management systems to cater for the company’s growing financial needs (AME Info 2004).

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