Sources of finance for small and medium enterprises

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Sources of finance for small and medium enterprises

Sources of Finance for Small and Medium Scale Entrepreneurs in the United Kingdom 2

ABSTRACT

This study examined the factors or determinants of successful small and medium entrepreneurs in the United Kingdom and the sources of financing for them As such the following research questions will be answered
What are the determinants to become small and medium successful entrepreneurs in the United Kingdom
What are the characteristics of independent small business owners and medium scale entrepreneurs in the United Kingdom and
What are the sources of financing for them in the United Kingdom

The study found that sample United Kingdom small scale and medium scale entrepreneurs revealed that the motivations for small scale entrepreneurs are more on the pull factors or intrinsic factors or rewards while the medium scale entrepreneurs are more on the extrinsic factors or rewards The small scale entrepreneurs displayed a low entrepreneurial orientation while the medium scale entrepreneurs showed high entrepreneurial orientation Moreover the prior industry experience and previous business connections of small scale entrepreneurs are limited while the medium scale entrepreneurs are more extensive Also the medium scale entrepreneurs have extensive external support networks while their small scale counterparts are limited

Finally the sources of funds for small and medium enterprises in the United Kingdom are mainly from bank financing and selffinance from savings especially during the first two years However after two to five years they borrowed from banks Sources of Finance for Small and Medium Scale Entrepreneurs in the United Kingdom 3

Chapter 1

INTRODUCTION

BACKGROUND

Small businesses are now well recognized and acknowledged as important and pivotal contributors to economic development job creation both nationally and internationally Many countries have now understood the significance of the small business and are now giving emphasis to it for creation of jobs innovation and the long term development of economy In fact bulk of enterprises in all economies across the world is constituted by the small firms and companies Such small companies also majorly contributes to private sector output and employment one which appears to be increasing over time

An entrepreneur is no doubt a pure risk taker who creates value by offering products and services They provide momentum for the change innovation and progress in the economy Entrepreneur is the one who has the knack of introducing new ideas in the market and they are often keen to change the traditional strategies and approach if necessary An entrepreneur is someone who can imagine the financial risk in starting up a new business and has the ability to capitalize the opportunity of benefit to an enterprise An entrepreneur is very creative skilful innovative and always keen to explore new ideas and strategies

The traits suggested by previous empirical research which describe entrepreneurs are 1 high need for achievement Decarlo Lyons 1979 Hornaday Aboud 1971 among many others 2 internal locus of control Hornaday Aboud 1971 Miller 1983 3 high need for independence and effective leadership DeCarlo Lyons 1979 Hornaday Aboud 1971 4 high need for autonomy DeCarlo Lyons 1979 Sexton Bowman 1983 1984 5 Sources of Finance for Small and Medium Scale Entrepreneurs in the United Kingdom 5 information processing capability McGaffey Christy 1975 6 preference for moderate level of risks McBer Co 1986 7 low conformity DeCarlo Lyons 1979 Sexton Bowman 1983 1984 8 aggression support and benevolence DeCarlo Lyons 1979 9 energy level risktaking and change Sexton Bowman 1983 1984 10 dominance endurance innovation selfesteem low anxiety level and cognitive structure Sexton Bowman 1983 and 11 low interpersonal effect social adroitness low harm avoidance and low succorance Sexton and Bowman 1984

Thus this research concentrates upon the reasons influencing individuals to

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