Influence of fund in acquisition of goods by small and medium enterprises.
Small businesses can no longer concentrate themselves to focus on strictly domestic acquisition in the competitive global business environment. For businesses across the globe, acquiring global is not a preference or a matter of choice, but rather a necessity. Failure to buy from global markets is a big mistake for modern businesses, whatever their size.
To be successful small and medium enterprises must consider themselves in procurement without borders. Going global can help an enterprise acquire goods timely, from right supplier, with right quality and at right cost, this will result to benefits that will power an enterprise to grow strategically.
Unfortunately, most of the existing SMEs in the business lack the scope on acquiring globally, they have limited fund and experience to outsource their requirements globally, as a factor many of them depends on acquisition domestically (Robert, 2015).
External finance for small and medium enterprises is essential for boosting start-up businesses and ongoing of the business especially when wants to acquire requirements that are costly. In addition, without external finance, small and medium enterprises will probably not be able to acquire quality goods that are found from international market, to expand the businesses and strike linkages of business with the large firms.
Further, access to finance is the most serious barrier to expansion of businesses and start-ups which have been mentioned a challenging factor limiting SME’s to the access to the financial support especially from bank loan that mostly contains strict conditions that are compelled to be difficult, has limited time to be returned with high interest rate and demands to put assets as a bond so as to receive loans (Dimitri, 2015).
Although acquisition of goods by small and medium enterprises still have limited scope for both who intend to acquire for manufacturing and for those acquiring for sale. Government policies and regulations over many countries still undermine favorable environment for acquisition of goods by the small enterprises (Saha, 2015). Taxation for international procurement, interest payments and complex shipment procedures are among hindrances facing acquisition by small and medium enterprise (Musau, 2015).
SME’s in Ghana do not also have the luxury of picking a financing scheme that will be appropriate for their businesses. The major type of financing open to them is debt financing from the financial institutions, which most often comes with a long list of requirements that most SME’s find them difficult to meet.
The other type that is Asset financing, aside the long list of criteria also requires operators of SME’s to provide 50% of the funds and the financing institution providing the other half to fund the purchases of the assets. This type of financing does not allow for growth of the SME’s sector since they are all short term in nature (Brinders, 2013).
Studies on influence of fund in acquisition of goods by small and medium enterprises.
In South Africa, Olusola, (2017) conducted a study on the measures to be undertaken by
SME’s in acquisition of goods, found that many SME’s have the culture of combining profits and acquire certain goods from any country worldwide. Some commented that shipment of goods over long distance demand high financial competency, for those who has limited capital remain sharing capital while other buy the home market goods by fearing high shipment cost, damage and wastage of time planning and managing acquisition process.
Anderson, (2011) in the journal of “business in developing countries views” SME’s in procurement of goods are weakened with the aspect of inadequate finance and lack of knowledge on how to obtain finance. Most of the business owners are not aware that the shares and business assets could be used as part of security against loans. Others do not have an idea what to do to qualify for facility from banks while others lack potential goods that suits their kind of business had a little effect on their procurement effectiveness.
Lack of application of information communication technology by the SME’s is a challenge to their success when acquiring goods. Most of the small medium enterprises acquire goods from the last hand market that obtained at higher cost, they face financial problems to acquire goods through e-procurement by application of ICT.
An enterprise that is able to acquire goods through e-procurement, it is able to achieve whole life cost of goods (value for money) that indicate better quality of the purchased goods. through the application of ICT by SME’s, the use of barcodes and radio-frequency identification (RFID) will help to reject defective goods, to know the exact market price of the product and able to track the manufacturing date and expiry date of the product. The knowledge on acquisition of goods to SME’s still a challenge (Davel, 2015).