SME

What is a SME?

As per the definition of SME or a Small or Medium Enterprise, the amount of turnover and the number of employees in that particular company is capped. When it comes to a SME, the entrepreneur has to invest a capped amount of money into the startup capital and the investments made for plant and equipment. This ensures that you do not have to spend too much in the initial investment and at the same time, you are also getting a lot of tax and legal benefits out of the same.

Benefits of owning a SME

There are many legal and tax related benefits when you plan on starting a SME. But at the foremost step, as an entrepreneur, you need to understand the direct benefits that you are gaining from your company.

Less stress, better returns

Starting a company can be stressful but if you are planning to start a small or medium enterprise, then the amount of stress actually goes down. Though you will still have to look into a lot of finer details, as with any other company, you do tend to get certain freedoms that you can enjoy if you opt to make it a SME. The registration process of a SME is not too difficult as you are sure that you will get some of the legal benefits as well. Also, since the amount of investment is curbed to a certain level, your financial stress goes down as well.

You can easily forecast your finances

It is never easy to understand exactly how much you will have to invest in a company. But in the case of a SME, since the amount is capped off, you automatically have a maximum figure in your mind. This helps you to make sure that you are able to plan out a step wise investment plan for your company. This in turn gives you a fair idea about your immediate expenses.

You can deliver faster

Through the functioning of a SME, you will be able to start your business faster than any other type of company. Along with that you can also pay better attention to your customer needs since you get more time to look into the same.

It is easy to adapt to the market place

Today’ market conditions keep fluctuating and the small and medium sized enterprises are most likely to survive these turbulent times. Since you get a lot of time to fix strategies and get the tax benefits, you can easily get good profits in such turbulent times.

Easier to balance personal and professional life

This might seem like a minor benefit, but in today’s hectic lifestyle, it can get difficult to balance both aspects of your life. Owning a SME or working for one gives you the highest chances of balancing both your personal and professional life easily.

Challenges faced by a SME

]With the large number of benefits, come a few challenges as well. Though these challenges might seem quite big initially, each of them can easily be countered and dealt with.

Financing challenges

Starting up any business can be quite financially challenging. Even though it is a small or medium scale industry, you will have to invest quite a hefty amount into the business in the initial levels.

Delays in receiving payments

Many a time, you might end up selling a lot o goods and services, but the payments get quite late and thus there is a problem in rolling your capital. This is a problem faced by many SMEs in today’s day and time.

Supplier problems

There are sometimes a lot of labour and supplier problems that need to be dealt. One of the most common ones is the credit notes or bill discounting payment failures.

Financial aid for a SME

Each of the above challenges can be easily countered with the help of a loan. There are many different types of loans that you are eligible for if you are operating or initiating a SME. Here are some of the common loans that you can take from any good financial institution.

Project Financing loans

If you do not have adequate capital to start the business you can opt for this loan to help you invest in the company.

Corporate loans

A corporate loan enables you to get the finances required for your interim needs. These loans are designed to meet individual needs of entrepreneurs and companies.

Equipment financing loans

If you require financial aid to help you pay for your plant and equipment, then you can avail this type of loan.

Working capital loans

In case you are having trouble in getting payments and need cash as working capital, you can avail this loan at the time of need.

Bill discounting loans

A bill discounting loan helps you to get a loan against your credit notes or bills of discount.
These loans will help you to get a strong foothold in the industry with the help of your SME. If you are planning on starting a new business, a SME is definitely a very good option. You can enjoy a lot of different benefits and curb the cons with the help of financial aid that you are eligible for.