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MGT601 - SME Management - Lecture Handout 18

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PROBLEMS FACED BY NEWLY ESTABLISHED COMPANY

This lecture will continue with the previous lecture problem and then chapter deals with the teething problem that a newly established company faces.

Cash Flow Analysis

If the projected sales associated financial requirements and available financial resources are known, the anticipated cash flow can easily be determined.

Cash Flow (Projected)

Cash Flow and Financial Transactions Period 1 Period 2
1) Cash flow    
Initial expense    
Fixed investment    
Operating expense    
Total cash outflow    
2) Cash inflow    
Cash sales    
Account receivables    
Total operating inflow    
3) Net cash flow (2-1)    
4) Desired minimum cash balance    
5) Total amount of funds required
[3 (if negative + 4)]
   

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MGT601 - SME Management - Lecture Handout 13

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SHORT AND MEDIUM TERM ISSUES FOR SME POLICY FORMULATION – III

This lecture is continuation of defining the issues for making a SME policy; this lecture deals with the short and medium term issues. The vital issues of gender development and environmental protection are also discussed in detail

Market and Industry Information

Access to market and industry information is one of the keys to develop successful business strategies. Frequently, business and trade associations are able to provide their members with such services. By associating with like institutions in foreign countries, they are also able to establish links and obtain information on foreign markets.

Over half of our SME belong to business and industry association. Their perceived role is limited to lobbing and negotiation with the government. Yet very few SME (12%) perceive their associations to be a source of information on new developments in their fields of business operation. How to increase the service provisions by all types of stakeholders will become a fundamental issue when SME support programs will be looking for deliver channels.

Monitoring Developments
Harmonizing Enterprise size Categories

Pakistan has no across the board legal definition of SME. This makes is extremely difficult to monitor the development of our SME economy and to establish benchmarks against other countries in order to devise areas of intervention and support.

Various government departments and public-sector agencies have adopted their own definitions. There are, of course, various reasons for them to define SME, and there may even be discussion on just how a strict and reasonable size standard could be defined. A number of current definitions are based on capital standards since this influences the pattern of fund raising in the formal and informal market by SME. Many stakeholders consider enterprises with 100 or more employees as large, and enterprises with less than 5 employees as micro. Yet our statistical system classifies enterprises with more than 10 employees as large, and the State Bank of Pakistan considers those with more than 250 employees as large.

Read more: MGT601 - SME Management - Lecture Handout 13