An Analysis Of The Main Causes Of Private Small And Medium - Sized Enterprises Being In Business

The operating predicament confronted with the private small and median size enterprises has drawn widespread attention of the public. Lacking in their own capabilities and the tough external environment are the major reasons that have led the private small and median size enterprises into operating predicament. However, the majority of the existing researches only focus on the superficial factors that have resulted in the financing difficulties of these enterprises.Through theoretical analysis and a practical case of a particular enterprise, this paper sums up both the internal and external factors. Firstly, internal factors:(1) Entrepreneur’s capabilities. This part focuses on entrepreneur knowledge, strategic vision, industry development trend, basic attainments, etc.(2) Corporate governance. This part mainly analyzes such issues as operating mechanism as well as financial management of the firms.(3) Market rules regarding firm operations. This part mainly analyzes marketization of professional managers, intellectual property rights protection, technological innovation, and so on. Secondly, external factors:(1) Input cost of the firms. This part mainly analyzes such problems as labor cost, raw material cost (including logistic cost), RMB appreciation, capital cost.(2) Tax. This part mainly analyzes tax system reform lag, double taxation, tax collection harsh, unreasonable tax provision, inconsistent tax policy, etc.(3) Government administrative fee. This part mainly analyzes such problems as redundant payment items, serious "Three Chaos" phenomenon, arbitrary levying, etc.(4) Social burden. This part mainly analyzes various forms of fees such as grant in aid, solicitude fee in the society.(5) Competitiveness among firms. This part mainly analyzes vicious competition, entrepreneurship, spirit of competition of the firms, etc.(6) Financing difficulties. This part mainly analyzes the factors leading to the financing difficulties confronted with private small and median size enterprises.This paper systematically analyzes the internal and external factors that have led the private small and median size enterprises into operating predicament; meanwhile it provides a relevant case, enriching the researches in the field of operating predicament confronted with private small and median size enterprises. From the perspective of practice, this study serves to provide beneficial reference for policy makers as well as management of the firms with the aim of promoting the healthy growth of private small and median size enterprises. More specifically, on the one hand, this paper provides reference for policy makers to formulate practical and effective supporting and nurturing policies for private small and median size enterprises; on the other hand, this paper provides theoretical basis for management of the firms for recognize its own weaknesses and continuously improve its own capabilities.