Entrepreneur Behaviour & Dilemmas in MSME

Entrepreneur Behaviour & Dilemmas in MSME 

03/5/2018

Entrepreneurs in MSME sector are plagued with many issues during his day to day activities along with production in his unit. These issues generally block the regular thought flow of the entrepreneur and affect his productivity.

Managing personal and business financial accounts:-

Generally, an entrepreneur diverts his funds for personal needs from his business account. This can be for various reasons; to reduce taxes, emergency personal needs etc. This can affect his payroll expenses, working capital and cash payables etc.

Understanding Cost accounting of products/departments in the unit:-

            Entrepreneur generally maintains consolidated financial statements and analysis of his unit. A standalone cost accounting of products helps in his diversification of products vertically, over-reliance on certain products without knowing about the profit margins. There is also a need to prevent the entrepreneur from directing funds within various products frequently.

Liabilities with banks:-

            Entrepreneur on various occasions approaches banks for buying machinery, building infrastructure, working capital needs, clearing of unorganised debts etc. These units can also be dragged into NPA’s due to various personal or external reasons. So, the entrepreneur had to spend a lot of time with banks and reduce his efficiency and cause the decrease in productivity of the unit.

Idle assets management:-

            Every MSME unit may not run to its full capacity utilization. So, generally, there would physical assets which are unused for a couple of years. The entrepreneur has to identify these assets and either liquidate them or put into utilization.

Nepotism:-

             Entrepreneurs tend to lend money to relatives and to people near or dear from his business account. Most of these fund transfers happen through word of mouth and puts little effort in retrieving them. So, the entrepreneur had to keep a check on them.

Importance of Marketing:-

In MSME sector, people are sceptical about conversion rate from marketing their products online. Most units generally have direct connections with their customers, as they are in a B2B market. They are happy with the present set of dealers, they do not focus on expanding to other potential markets.

 

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