Challenges of small businesses
Growth in the small and medium business in Canada and other developed countries has been very
significant. This sector of the business community now represents about 40 percent of GDP and accounts
more than half of total employment. Today small businesses are more diverse and more vigorous than
ever, but they also faces newer and more challenges or inhibitors to their growth than their older conter
parts. This research will attempt to find the answer to the following hypothetical question:
"What are the barrier to entry, inhibitors to growth, and detriments to the health of small business and entrepreneurship today?"
Access to capital and credit at various stages in the business life cycle is identified as the major
hurdle by the entrepreneurs. For many small firms and most start-ups, the personal funds of the business
owners and entrepreneur and those of relatives and acquaintances constitute as the major source of capital.
For many small businesses, especially during the early years of their operation, credit is simply not
available. For many others, the limited available credit is not through bank loans. Due to this many of
them rely on multiple credit card balances and home equity loans as major sources of credit for start-up
firm. Because banks are bound by laws and regulations to prudent lending standards that require them a
risk management assessment for each loan made. These regulations were made more vigor during the late
1980'' and early 1990 . Banks always found that lending to manufacturing firm with hard asset such as
property, equipment, and inventory has always been easier than lending to today's expanding service sector
firms. Because the service sector firms own few hard asses, therefor lending judgment have to be based
in terms of character, markets, and cashflow, which make it...