7 SME's Financial Problems, Causes and Solutions

UKM is a type of individual, group, business entity, or household business that is not free from problems. Included in this are crucial issues related to finance. Yes, the financial problems of SMEs are problems that must be addressed immediately if business owners want their businesses to run smoothly and successfully.

Then, what are the causes of financial problems that often afflict SME businesses and how to solve them, along with an explanation?

7 SME Financial Problems, Causes, and Solutions

SMEs in Indonesia continue to grow rapidly, especially during the Covid-19 pandemic. The number of employees who have been laid off and the work-from-home system has an impact on the amount of income which tends to be smaller than usual.

This condition makes many people rack their brains so that the kitchen smoke can still be billowed. They end up making their own business or in groups to increase their income. Businesses like this fall into the category of SMEs that are at risk of experiencing financial problems if the owner does not have experience in running a business.

Please note, this will be fatal if not immediately get the right response. So, what are these financial problems, and how to overcome them, here's the full review.

1. Do not have business capital

The financial problem that most often occurs in SME businesses is the absence or lack of working capital. Though capital is an important point in building a business. If business owners experience this, one way to overcome this is to find investors or make a proposal for submitting business funds to the government.

2. Not recording business finances clearly

Business finances must be recorded. Even though it is only a small-scale business, it still has to have financial records containing income, expenses, total assets, and accounts payable.

If you don't want to bother making financial records manually, business owners can download applications from their cell phones. This application can help business owners record their finances neatly and clearly.

3. Business account combined with a personal account

Many SME owners are often ignorant of this problem. They think that because they are only SMEs, it's okay if business accounts are mixed with personal ones. Though mixing accounts like this is not recommended.

No matter how small the business, it is better if you have a separate business account from your account. This separation is to avoid the business budget being used for household purposes or vice versa.

4. Running a business without a budget plan

Businesses will have difficulty if the owner does not manage the business properly, for example running a business without a budget plan. The absence of a budget plan will make it difficult to record cash flows. Especially if there is an increase in production capital. Therefore, make a monthly, semester, and yearly budget plan so that it is easy to manage cash flow.

5. Don't have official permission yet

Not having an official permit is also one of the causes that will lead to financial problems for SMEs. Because without official permission, business owners will have difficulty finding investors or applying for loan funds for additional capital. At least the business owner must make a TIN, and regularly pay taxes and other environmental permits if any.

6. Do not take advantage of online marketing

The next cause that can cause financial problems in SME businesses is not utilizing online marketing. However, today's technology is very sophisticated. With the advancement of this technology, business owners must be able to adapt and follow the latest trends related to product marketing.

Don't just focus on traditional product marketing. Try to offer products online so that the target consumer is bigger and wider.

7. Lack of evaluation when running a business

Evaluation is an important factor in running a business. The point is to find out the weaknesses and strengths in the business that is being worked on. With regular evaluations, business owners can find out which areas of the business need improvement. In addition, evaluation can help businesses avoid SME financial problems that can occur at any time.

Well, if you need funding assistance to develop an SME business, you can try collaborating with ethis.co.id, which is a fintech company known as a peer-to-peer (P2P) lending platform.

Ethis hopes that with the capital assistance offered, it will be a new opportunity in providing access to capital for SMEs. For more information, you can access the website ethis.co.id