Essays on The Determinants of Investment Readiness of Growth in SMEs Coursework

Download full paperFile format: .doc, available for editing

The paper 'The Determinants of Investment Readiness of Growth in SMEs" is an outstanding example of finance and accounting coursework. SME’ s growth is a central focus area in strategy, entrepreneurship and organizational research. Firm growth, in general, refers to increase in size. It is normally closely associated with the firm overall success and survival. Growth is used as a simple measure of determining the success of a business as well as the most appropriate indicator of the surviving SME’ s performance. Moreover, growth is an important prediction for the achievement of the other financial goals of the business (Peacock, 2004). Different measures have been used to determine the growth of the firms.

The most frequently used measure for growth changes in the firm’ s turnover. From the interviews conducted by the National Investment Council, it was found that most of the SME’ s have no aspirations for significant growth. It is only about 10% of SME’ s aspire to significant growth. The interviews conducted showed that some of the SME owners were either not willing to, or did not know how to meet the requirements of external investors (National Investment Council Report, 1995). Investment readiness Investment readiness refers to an aspect of growth preparation and quickening in small and medium-sized enterprises (SMEs).

Failure to evaluate investment readiness properly makes the SME unable to realise their prospects. Investment readiness is generally used in the context of raising external equity finance. Investment readiness may be defined using three dimensions. They include equity aversion, investability and presentational failings. Equity aversion is concerned with the entrepreneurs’ attitude towards equity finance. The second dimension is concerned with investability of those businesses that do seek external finance.

The final dimension of investment readiness includes shortcomings in business plans and other written documents aimed at the investors (Beijerse 2000). The issue of finance is very significant to any business or firm regardless of how much readiness they may affirm. Moreover, financial managers need to be able to make viable decisions that can lead to set goal accomplishment. The managers should understand the various aspects of financial management that can help them in their daily operations. Financial management is an activity by which business organizations manage funds and financial activities in order to meet business demands (Beijerse 2000). The Determinants of Investment Readiness of Growth in SMEs There are several factors that determine the investment readiness of growth SME’ s.

The major factor is the business attitude to finance. In all the SME’ s, the financial management concept is very vital and this means that the financial managers have to treat it with much caution. Financial managers are therefore required to change their attitudes towards financing issues and suitable accountability of financial activities should always be a priority to most SMEs so as to be successful in their investments ventures (Beijerse 2000).

The complexity of taxation and accounting systems is another factor that affects most SMEs. This complexity does not encourage investment growth. In addition, such methods do not promote the enhancement of obtaining finance since the systems fail to deal with the risk inherent in most investment opportunities. This is always attributed to the shortage of proper financial information (Beijerse 2000).



Beijerse, P 2000, Knowledge management in small and medium-sized companies.

Knowledge management for entrepreneurs: Journal of Knowledge Management Vol. 4

Candida, G Lars K and Oystein, W 2010, The Life Cycle of New Ventures: Emergence,

Newness and Growth. Edward Elgar Publishing.

Deakins, D and Freel, M 1998, Entrepreneurial learning and the growth process in SMEs. The

Learning Organization, Vol. 5

Debra, J and Colin T 2000, European business: policy challenges for the new commercial

environment. Rutledge.

Douglas, E and Shepard, D 2002, ‘Exploring investor readiness: assessments by

entrepreneurs and investors in Australia’. Venture Capital, Vol 4, no 3, pages 219-236.

Ferris, B 2000, nothing ventured, nothing gained. Sydney: Allen & Unwin

Golis, C 2002, capital: a business Enterprise and venture builder’s and investor’s handbook. 4th Edition. NSW: Allen & Unwin.

Houben, G Lenie, K and Vanhoof, K 1999, A knowledge-based SWOT-analysis system as an

instrument for strategic planning in small and medium sized enterprises. Decision Support Systems Vol. 26

Lee, K and Carter, S 2005, Global Marketing: Changes, New Challenges and Strategies,

Oxford, London.

Meredith, G and Williams, B 1999, Managing finance essential skills for managers. Sydney: McGraw-Hill.

National Investment Council Report (1995, August). Financing growth: policy options to improve the flow of capital to Australia’s small and medium enterprises.

Nielsen, J Trayler, R and Brown, B 1995, Banking expectations: do bankers really understand the needs of the small business customer. Oxford, London.

Paul J 1997, Financing growth in Canada. University of Calgary Press.

Peacock, R 2004, Understanding Small Business: Practice, Theory and Research, Scarman

Peacock, R 2004, Understanding small business: practice, theory and research. Adelaide: Scarman Publishing.

Pittwood and Elaine (2002). Business finance: small business management series 2002. Adelaide: Institute of TAFE. Publishing, Adelaide.

Sparrow, J 2000, Organizational Learning in Small Firms. Implications for Business

Support. Report by KM Centre. University of Central England

Download full paperFile format: .doc, available for editing
Contact Us