SME's

SME's (success)

- Entrepreneurial ability - Access to information - Flexibility of the business - Focus on market niches - Reputation

Combination of factors that lead to failure

- failure to plan - lack of information - leadership crisis - inaccurate record keeping failure to delegate - complacency - incorrect marketing strategy poor location - lack of financial planning negative cash flow - new competitors - illness - supplier problems

SME's (economic contribution)

-Contribution to gross domestic product -Contribution to employment (8 million people, 70 % of private sector) -Contribution to the balance of payments (5%) -Contribution to invention and innovation

SME's (role)

-Employs about 70 per cent of all the people working in the private sector -Produces approximately 50 per cent of all the products produced each year -Provide a wide range of products used by large businesses -Small to medium enterprises (SMEs) are the 'engine room' of the Australian economy.

SME's (failure)

-Insufficient capital -Poor business plan -Inadequate financial plan

SME's (definition)

-Micro (fewer than 5 employees including owner) -Small (Between 5-19) -Medium (Between 20-199) -Large (Above 200)

Access to information

Accurate and up to date information allows the business owner to make better decisions. The following information is essential in making informed decisions. -Profitability -Quality of product -Performance of employees -Customer wants and needs

Reputation

SME are better able to provide individual service which increases their reputation for quality and service. This should help grow its market share.

Entrepreneurial ability

The skills of the entrepreneur are vital in small businesses. These skills will guide and manage the business throughout the business life cycle responding to challenges at each stage

Flexibility of the business

They are able to adapt to changes in the external environment because there are less layers of management, decisions do not need to be approved by various managers, and a closer relationship between owner and customer means that the manager is the first to notice the need for any change. This will result in SME attracting customers first as it takes longer for larger firms to react to changes in the consumer market.

Focus on niche market

This is because of the closeness of relationship between the owner and customers results in a greater understanding of the wants of this unique customer group.