The challenges facing small and medium sized businesses in London and recommended solutions

They have also employed an average of 60% people in the private sector. However, these business face so many challenges that have led to their failure. This study will look at the challenges faced by small and medium sized businesses and recommend solutions. Table of Contents CHAPTER ONE 2 1. Introduction 2 1. Cost of housing 8 2. Inadequate skills 9 2. Inadequate access to technology 9 2. Competition from large corporations 10 2. A legal and regulation environment that inhibitive 11 2. Instrument of data collection 16 3. Population of the study 17 3. Sampling method 18 3. Sample size determination 18 3. Method of data analysis 19 CHAPTER FOUR 21 DATA ANALYSIS AND PRESENTATION 21 4. Discussion 26 5. Conclusion 27 5. Recommendations 27 References 28 CHAPTER ONE 1. Introduction 1. Background of the study Medium sized and small businesses contribute greatly to the economy of London. The internal factors are the factors within the business which may lead to its failure.

On the other hand, the may be external factors which originate from factors outside the business. One of the major challenges that these SMEs face is the lack of funds. Worldwide, all SMEs face the challenge of lacking funds. Every business needs money to cater for their expenses. million people. Most of these challenges are common to most SMEs and start-ups. To mitigate these challenges different strategies, have to be considered. Every business is unique in its own way, and therefore different strategies are used to mitigate the challenges. Whatever is challenging to one business may not be the same for another business. London has been experiencing a very high growth rate and is expected to continue through t 2020. SMES count up to half of the employment in the whole of London.

This is a clear picture of the importance of these small businesses. However, the SMEs are facing a lot of challenges which are making it hard for them to flourish and grow. Some of them do not actually survive to see their fifth birthday. Research questions 1. What are the challenges facing the start-ups and SMEs in London? 2. What are the solutions for the challenges facing SMEs and start-ups in London? 3. What are the effects of housing on the Small and Medium sized enterprises and start-ups in London? 4. What is the impact of lack of skills to SMEs? 5. The time for conducting the research was also limited. The study respondents were also busy people and were engaged most of the time the researcher wanted to meet them.

The researcher however communicated with the target group and made arrangements for specific time frame for gathering information which helped to save money and time. The researcher sent the questionnaires through email to those who were not available. CHAPTER TWO LITERATURE REVIEW 2. In many countries, banks find it hard to give loans to small business and start-up businesses because of the high risk associated to it should the business fail. This also includes a high rate of transaction (King & Levine, 1993). Even though many SMEs seek for financial aid from banks, the banks may find it hard to give out loans due to the high rate of interested attached to the credit. In a certain case study investigating whether lending SMEs in Ghana was more expensive than large corporations, found that processing the loan for large corporations range from up to 16 days while lending the SME took up to 24 days.

Most of the time the SME deal with the bank staff when borrowing funds, who a have little say on such issues. This has made it difficult to stay in business (Make It Cheap, n. d). The Make it Cheaper study also shows that an estimated 46% SMEs were forced to increase the cost of goods and services and 22% had to lay off some of their employees because they couldn’t afford to pay them. Cost of housing The cost of housing is a very vital consideration for business establishment. Houses that are of very high cost may be a challenge to start-up and SME businesses to afford. They enter the business world armed with little or no skills at all which leading to their failure.

With the high rate of competition from reputable businesses, it is hard from these businesses to survive. Most SME owners run the business through trial and error from their own conscience because they lack the skills of managing. This could easily lead to the failure of the business. In addition, most SME owners especially from third world countries have not gone through formal education. Most consumers spend their time online and mostly in these social media (Jones & Rowley, 2011). For an entrepreneur to be successful, they have to make an online presence. It is in these online platforms that businesses learn the tastes and preferences of the customers. Besides, the social media platforms give an opportunity for the SME businesses owners to interact with the customers.

Many SME owners may not be aware about the importance of social media. They lack confidence in the SMEs because they assume that their products and services are of bad quality. Preference is hence given the brands that well known. Competition comes in when a firm keeps doing the same thing all the time. Most small firms find themselves caught up between competition because their products are not differentiated. Differentiation of products involves having something unique about the product. Different business requires different infrastructure to operate. Lack of these infrastructure could hinder the operations of a business. These infrastructures include machines, water, electricity among others. SMEs in developing countries that are situated in the rural areas may face the difficulty 2. SOLUTIONS TO THE PROBLEMS FACING SMES IN LONDON 2.

Another alternative way for SMEs to get funds is through angel investors. Angel investors are the wealthy people who are willing to fund a business especially if the business has potential for growth in the long term. He funds the business and may expect a 20-25% return on their investment. This may rip off the small profits from the business but is worth it. With the digitalization of the world, everything has become accessible with a click. Apart from that, the entrepreneurs should be taught to look for information from the internet on how to handle the challenges they face. The internet has vast knowledge about every topic that an entrepreneur would want to learn. Funding to buy infrastructure Lack of infrastructure is a common cause of business failure for SMEs.

Different organizations can introduce the concept of micro leasing. Micro-leasing can be referred to as a contract between two parties where the lessor allows the lessee to use their asset in exchange for payments made periodically. Introduction Research is the process of collecting information and analyzing it to gain knowledge about the topic. In addition, research involves the analysis of the data collected and drawing conclusions from it (Saunders, Lewis & Thornhill, A. The purpose of research methodology is to be able to obtain reliable data that is free from biasness and errors. This section will introduce the sampling procedure, the study population, the instruments of data collection, the methods that will be used to analyze data, research design, sources of data and the sample size for the study.

Research design Research design is the complete approach that will be used by the researcher to incorporate different elements of the study to ensure that the researcher address the research problem (Olakunari, 2000). The respondents may not provide data that is reliable (Strauss, 1990). The questions that are structured as closed may have a lower rate of validity. The respondents may not be comfortable to provide answers to questions that place them in a compromised situation. Data collection methods a) Primary data The research collected data from the survey through the use of the questionnaire. Due to the unavailability of some respondents, the questionnaire was administered through two ways. The researcher only incurs the cost of printing the papers. It is also a flexible and reliable method.

Those that were not reached could still have the questionnaire sent ton them via email. They help to cover all the aspects of the topic of study. Disadvantages of using questionnaires 1. n = 240 Therefore, the sample size is 240 small and medium sized entrepreneurs Percentage representation of the participants Small business entrepreneurs = 300 X 100 = 50% 600 Medium sized entrepreneurs 300 X 100 = 50% 600 Determining the number of questionnaires that will be administered to each group Small business entrepreneurs 50 X 240 = 120 100 Medium sized entrepreneurs 50 X 240 = 120 100 Both small and medium sized entrepreneurs will be presented with equal questionnaires of 120 each. Method of data analysis The method that will be used in the analysis of data is the use of percentiles. CHAPTER FOUR DATA ANALYSIS AND PRESENTATION 4. Introduction This section presents the analysis of the data that was gathered through the use of questionnaires.

The data will be analyzed and results interpreted. Education level Table 5 Number Percentage High school diploma 80 33 College diploma 60 25 Undergraduate 50 21 Post graduate 50 21 total 240 100 From the above table, the number of respondents with a high school diploma were 80(33%), those with college diploma were 60(25%), those with undergraduate degree were 50(21%), and those with a post graduate degree were 50(21%). Lack of capital and funds disrupted the operations of the business Table 6 Response Number Percentage Strongly agree 150 63 Agree 40 16 Strongly disagree 20 8 Disagree 30 13 Total 240 100 The number of respondents who strongly agree that the lack of funds and capital disrupted the business operations were 150 (63%), those agreed were 40 (16%), 20 (8%) strongly disagreed and 30(13%) disagreed. Use of technology to advertise, sell and market products and services Table 7 Response Number Percentage Strongly agree 40 16 Agree 40 16 Strongly disagree 90 37 Disagree 70 29 Total 240 100 From the table, the number of respondents who strongly agreed that they used technology to advertise, sell and market their products and services were 40(16%), those who agreed were 40(16%), 90(38%) strongly disagreed, and finally 70(29%) disagreed.

The cost of housing is too high in London and not affordable for business Table 8 Response Number Percentage Strongly agree 75 31 Agree 75 31 Strongly disagree 40 17 Disagree 50 21 Total 240 100 The above table shows that participants who strongly agreed that the cost of housing in London was very high and unaffordable for businesses was 75(31%), those who agreed were 75 (31%), 40 (17%) strongly disagreed, and 50(21%) disagreed. CHAPTER FIVE DISCUSSION, CONCLUSION RECOMMENDATION 5. The changes in consumer tastes and behavior have made all successful businesses to embrace technology. Without the use of relevant technological tools businesses are bound to fail. Conclusion From the study findings, it can be concluded that lack of funds for businesses can lead to business failure because businesses are not able to run their operations. The high cost of housing in London is also a contributor to the failure of businesses in London.

Finally, not embracing technology and lack of entrepreneurial skills have further led to the downfall of businesses. Retrieved from https://www. smallbusinessbonfire. com/business-funding/ Jones, R. Rowley, J. Entrepreneurial marketing in small businesses. Innovative characteristics of small manufacturing firms. Journal of Small Business Enterprise Development, 13(3), 363-380. Make It Cheap. n. d. Pidgeon, C. April 19). Caroline Pidgeon: We can only fix the housing crisis by tackling the UK builder shortage. Retrieved from https://www. ibtimes. com/2017/01/09/challenges-facing-smes-2017/ Strauss, A. Basic qualitative research. California: SAGE. Wilson, H. September 9).