Entrepreneurs of Small Enterprises in the UK

Entrepreneurs of gauzy Enterprises in the UK liquid puzzle is an main(prenominal) strategic issue to run business opening moves. venial enterprises be realising the importance of such lines to reduce losses lifts from this. Liquidity problems arise from shortage of working capital that require to maintain daily operations of the enterprise. If this problem persists for long-time, entrepreneurs be bound to stop their business. But it is difficult for blueish enterprises to get right support at the right time from banks and insurance policy companies due to certain terms and conditions imposed by them. So a guide in this field lead be helpful for both(prenominal) entrepreneurs and financial institutions to k at a time current scenario of enterprise level management of liquidness problems and the role of financial institutions to compute this problem. Intelligent forecasting of the future arc in market conditions is a preventive measure to work fluidness problem whe reas, bank support through different financial products is a curative measure in management of liquidity problem.This champaign has been initiated to chance upon and analyse entrepreneurs view towards liquidity problems of pocket-sized enterprises and role of bank to solve this problem. Categorically the major objectives of the present study areTo identify motley reasons of liquidity problems of bantam enterprisesTo uncover the views of entrepreneurs regarding the rehunt topic in inflammation of their age, education, invested amount of capital, enterprise life, location and nature of businessTo assess the risks determine by the entrepreneurs arises from liquidity problems of their enterprisesTo identify and read the role of bank in terms of available financial products to manage liquidity problemsTo suggest probable solutions to solve liquidity problems of runty enterprises.HypothesisH 1 there is no impact of small enterprises length of life on the coat of liquidity prob lems.H 2 Amount of investment has no submit on liquidity problems.H 3 Nature of business has no impact on liquidity problems.H 4 Banks facilities are comme il faut to solve liquidity problems of small enterprises.7. SourcesBroad Subject Area assembly line FinanceBooks and diarysAlsbury, A. (2001), Quick Answers to Small Business Questions, Series Editor Jay, apprentice Hall, London.Allen, F. and Gale, D. (2007) Understanding Financial Crisis. Oxford Oxford University Press.Bygrave, W. D. (1994), The entrepreneurship paradigm 1 a philosophical flavour at its explore methodologies, Entrepreneurship theory and practice, Vol. 14, No. 1, pp 1- 26.Bhaduri, R., G. Meissner and J. Youn (2007). Hedging Liquidity Risk. Journal of Alternative Investments, Winter 2007.Cecchetti, S. (2008), Monetary Policy and the Financial Crisis of 2007 2008. functional at http//fmwww.bc.edu/ec-j/sems2008/Cecchetti.pdf Accessed 11 November 2008.Cohen, W. (2005), The entrepreneur and small business pro blem solver, third edition, publish by John Wiley and Sons.Dawson, J., Findlay, A. and Sparks, L. (2006) The Retailing Reader. London Routledge.John L. Knight, Stephen Satchell (2003). Forecasting unpredictability in the Financial Markets. Butterworth-Heinemann.Dorfman, Mark S. (2007). Introduction to Risk Management and restitution (9th Edition). Englewood Cliffs, N.J Prentice Hall.Douglas Hubbard (2009) The Failure of Risk Management Why Its Broken and How to fixity It John Wiley Sons.Hisrich D. R. Peters P. M., (2002) Entrepreneurship, 5th edition, Pub., Tata McGraw-Hill.Hawkins, M. (2008) How to Benefit From Consumer Behaviour During a Financial Crisis. EzineArticles. purchasable at http//ezinearticles.com/How-to-Benefit-From.Hannon, P.D. and Atherton, A. (1998), Small firm success and the art of orienteering the value of plans, readying and strategic awareness in the competitive small firm, Journal of Small Business and Enterprise Development, Vol. 5 No. 2, pp. 102-19.I slam N. Mamun Z. M., (2002) Entrepreneurship Development, An Operational Approach, Pub., The University Press Limited,.Leaf, W. and Sykes, E. (2009), Banking, 3rd edition, T butterworth Ltd.McConnell I. (2009), Economic output posts biggest quarterly decline since 1980, The Herald (Glasgow), January twenty-fourth Issue, Final Edition, p. 26.Simpson, M et al. (2006), marketing in small and medium size enterprises, International Journal of entrepreneurial behaviour and research, Vol. 12, Issue-6, pp 361-387. Available atwww.emeraldinsight.com Accessed 15 November 2009Stoltz A, Viljoen M (2007) Financial Management Fresh Perspectives, Published by Pearson federation Africa.WebsitesSmall business banking, (2009) available at http//www.bytestart.co.uk/content/banking/banking-guides/business-banking-the-basics.shtml, Accessed 15 th November 2009Office for case Statistics (2008), Unemployment range rises to 5,7%.. Available at www.statistics.gov.uk Accessed 14th November 2009. numerat e of enterprises, employment and turnover by number of employees and application division, UK, start 2004, Available at www.statistics.gov.uk Accessed 14th November 2009HSBC and Barclays news, , 10th November 2009, Available at www.news.bbc.co.uk, Accessed 12th November 2009SME academy London online Available at http//www.smeacademy.co.uk/, Accessed 13 November 2009Banks Websiteswww.barclays.co.ukwww.hsbc.co.ukwww.natwest.comwww.lloydstsbbusiness.com8. Literature ReviewThe frugal recession that hit the UK in the second half of 2008 caused the retail industry to experience certain difficulties (McConnell, 2009 Kollewe, 2009). The credit crunch and growing unemployment reduced consumer income and using up levels and causes uncertain flow of cash for business enterprises. In such conditions, small enterprises are experiencing irregular cash flows, look at the cost sideslip strategy, excessive burden of debt, reduction of buyers and uncertain profit margins or losses. As a result s hortage of short term capital creates liquidity problems to small enterprises. In business, liquidity refers to the financial ability of an enterprise to stomach its short term obligations to bear day to day expenditures.The liquidity of retail sector specially small enterprises are greatly affected by macro scotch factors. These factors are divided into devil hire and in tell factors. The direct factors can be recognised as the decreasing disposable income, profession insecurity and credit financing hurdles (Office for National Statistics, 2008). The indirect factors are challenges of credit financing and investment capability which commercial organisations face and which shake off these organisations unable to continue with producing high quality products and customer service (The Economist, 2008). another(prenominal) macroeconomic factors that are related with small enterprises financial crisis are hearthstone price, house rent, and employment rate, and inflation rate, ava ilability of bank loan, interest rates and changes of consumers behaviour.Storey 1994 notes that small firms, however they are defined, constitute the bulk of enterprises in all economies in the world. In the latter half of the last ascorbic acid the increasing important roles of small firms and entrepreneurship cannot be in any focussing understated Bygrave 1994 Timmons 1994. Small firms are now a complex yield matter of research because of its huge number of limitations. These features of small enterprises are back up by Robinson and Pearce 1984 who focused on the issue of resource limitations of small firms. These limitations are best summarised by Carson and Cromie 1989 who suggest that small firm is actually characterised by common chord types of limitations, those oftheir impact on marketsfinancephysical resourcesIt is obvious that among these three limitations, finance is one of the most important one what is equally important for promoting products and services of small enterprises in the markets and acquiring physical resources. But undoubtedly these three limitations are in a cycle and interdependent. Liquidity problem is not only the result of shortage of fund, this problem is the consequences of other two limitations too. Definition of small enterprises of European Commission Enterprise and Industry europa.eu refers to uttermost number of employees are 49 and maximum annual turnover is 7million Euro for small enterprises. As per EU definition, there are 4,267,555 small enterprises in UK where 11,441,000 employments last UK Bureau of Statistics Start 2004. It is undoubtedly important to find out straight off the problems of such a large sector and solutions of the problems.As noted by Hill and McGowan (1999), there is no agreed definition or light up understanding, in view of the large literature that exists, of who the entrepreneur is or what it is they do. Entrepreneurship is probably best understood as a process, the constituents of wh ich are the entrepreneur, their persistent search of opportunities, usually grounded in the market place, and efforts to marshal the resources needed to exploit these opportunities thence the concept of the entrepreneurial SME (Hill and Wright, 2001). How entrepreneurship is vital and important for small enterprises? Hill and McGowan (1999) do this question by adding that, without entrepreneurial commitment, determination, vision, energy, tolerance of risk, and ambition, the entrepreneurial process in small and medium enterprises would not happen. Entrepreneurs making decision in miscellaneous circumstances must be sure to learn as oftentimes as possible about the situation, and approach the decision from a formal and rational perspectives (Ricky W. Griffin, 2002).The financial crisis, which transmitted internationally and caused disturbances in a wide of the mark range of powerful economies, many countries are seen to be on the doorway of recession if not already plunged int o it (Deutche Welle, 2008). Todays financial crisis what causes liquidity problems of business enterprises could be recognised as a major challenge for the survival of millions of small enterprises. The wide scope of the crisis caused a downturn in many industries, the unsuccessful person of leading organisations and overall economic recession to countries like the UK, Germany and France (Deutche Welle, 2008 Hopkins, 2008 Office for National Statistics, 2008). Many EU countries including UK experienced the shock in their banking sectors as the proviso of credit financing became a great challenge. Banks were suffering from lack of liquidity, which caused both business and non-business consumers financial hardships (The Economist, 2008). Though few banks like HSBC and Barclays BBC, November 2009 claimed that they are now in profit with enough liquidity to lend, most of the banks are in problem. Bank has short term and long term loan facilities, owe facilities, interest free bank ov erdraft facilities for small business enterprises Small business banking, 2009. in that location is a well-known idea that such facilities for small enterprises are really limited and process is very complex. Though various researchers carried out so many research to find out various factors that have direct and indirect impact on operations of small enterprises, relationship amongst entrepreneurship and small enterprises, buyers behaviour, marketing strategies, family and non-family business trends in this sector, there is still suspension in research regarding liquidity problems and role of bank to solve this problem in terms of entrepreneurs perspective. Specially at the time of current economic down town there is a necessity of new research in the mentioned field.9. Intended Methods of Data CollectionAssumptions of the studySmall enterprise This study considers EU maximum employee 49 definition to select small enterprises.Scope and limitations of the nurture The study go f orth focus on randomly selected 40 small enterprises of different sectors like hospitality, grocery, fashion and stationary from UK (London Area Zone 1-4). Since the study volition cover only the mentioned area, it will not reflect the detailed UK scenario as a whole about the research.Data Collection Procedures The proposed study is an empirical one. Both primary and secondary data will be used during the study. For collection of primary data self completed questionnaire will be used to collect cultivation from entrepreneurs and executives of business enterprises. Observations and interview will be conducted in several cases to confirm more authentic information from the entrepreneurs. Secondary data will be collected from available literatures in form of books, journal, magazines, published materials, research articles, and online materials. To identify available financial products of banks to solve liquidity problems of small enterprises, banks websites will be used as a sourc e of data and information. The researcher will also call the answerer to ensure timely feedback about questionnaire. In case of necessity, personal contacts will be used to support the research process.Methods of Data Analysis around parametric and non-parametric tools and techniques of statistics (like average, percentage, test of hypothesis, sampling distribution, etc) will be used to analyze data and information related with the study.