Managing Small and Medium Enterprises: Challenges and Strategies | Desklib

This study material by Desklib discusses the challenges and strategies involved in managing small and medium enterprises, with a focus on Ensoft Limited, a leading SME in the UK. The report covers the nature of the entrepreneur, start-up process, business concept and competitive advantage, present amount of demand and competitive environment, growth and evolution of the business, and challenges of managing and running the SME. It also provides insights on the government support schemes available to the business.

Managing small and medium
enterprises

CONTENTS
INTRODUCTION......................................................................................................................1
Background on the SME........................................................................................................1
Aims and objectives of the study............................................................................................1
FINDINGS.................................................................................................................................1
Nature of the entrepreneur......................................................................................................1
Start-up process......................................................................................................................2
Business concept and competitive advantage.........................................................................3
Present amount of demand and competitive environment.....................................................4
Growth as well as evolution of the business to date...............................................................5
Challenges of managing and running the SME......................................................................5
Analysis of the current growth and development strategy of SME........................................6
Government support schemes available to the business.........................................................7
CONCLUSION..........................................................................................................................7
RECOMMENDATIONS...........................................................................................................8
REFERENCES...........................................................................................................................9

INTRODUCTION
Background on the SME
Management of small and medium size business is now easy rather it involves
different complexities. There are assortment of challenges which come across by these firms
such as high level of competition, human resources, issues pertaining to sources of funds and
so forth. Further, there are varied factors as well which are present in the business
environment that directly influences the business and decreases the ability of making
improvement in effectiveness as well as efficiency of the company (Herr and Nettekoven,
2017). It is obligatory on the part of the management of the firm to frame diverse approaches
along with business plans which helps the workers in performing their tasks and duties
effectively.
Aims and objectives of the study
Considering this, the current research report takes into consideration Ensoft Limited,
one of the leading small and medium sized enterprise of UK that is being engaged into
building of tools and processes for construction applications. The firm helps in making
improvement in quality, security and support in management of variation. The report will be
going to explain in relation with the nature of the business, the procedure related to starting a
small business, sources of competitive advantage, present amount of demand and growth of
the business. Other than this, challenges being faced by the company in running and
managing business will also be discussed effectively.
FINDINGS
Nature of the entrepreneur
Ensoft Limited is a United Kingdom’s manufacturer of ready to use software for
construction applications. It is a small and medium business with around 73 workers in the
firm that offers their business activities. There are many software’s being prepared by the
firm however some of them being utilized by some of the famous business corporations such
as Road-Master and Barbeque software. The main aim of the company is to carry out their
operations successfully for attaining sustainability in operations. the procedure being utilized
by the firm for conducting the research is being known as primary method by which the most
reliable data is being (Yoshino and Hesary, 2017). The main objective of Ensoft limited is to
create such kind of a tools as well as processes which makes efforts in enhancing security,
quality, cyber-physical, management of variation system. Furthermore, it is a community-
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based business which serves the requirements of the customers. The organization is working
in the software industry which offers ready made software for the external organization.
numerous have been passed in offering their functions in more suitable way. The processes
and methods being utilized by the firm for conducting the study is known as the primary
approach as through this the company is in a position to obtain most reliable data (Burns,
2018). Moreover, the main aim of the firm is to create such kind of tools as well as processes
which contribute their efforts in making improvement in security, quality, management of
variation and cyber-physical systems. One more goal of the Ensoft limited is to achieve a
sustainable growth in the operations and functioning of the business by determining the
factors which might influence the working and leads the firms towards the path of becoming
one of the leading software firms in the United Kingdom. The nature of the business can
easily be comprehended by the two terms that is:
 Limited amount of budget – One of the key viewpoints of the small and medium
business like Ensoft limited is that they work in less amount of budget. Thus, there are
different types if challenges being faced by them in carrying out their business
activities in optimal way. In addition to this, it also restricts the company towards
adoption of many things such as utilization of innovative and creative technologies
(Scarborough, 2014).
 Community based – Furthermore, the main emphasis of the company is to
manufacture and create software which can serve the requirements of the customers.
Start-up process
There are different steps which has been undertaken by the company to start this
business and this start-up process is being elaborated below:
 Market research – It is quite essential to comprehend the influence of external factors,
conduct of customers, present trends and prevailing market conditions. Ensoft limited
has also adopted primary method for collecting information through seeking help of
questionnaire, poll and survey method. This method has been utilized for getting true
data in regards with the factors available within the market.
 Protection of intellectual property rights – Since, Ensoft is a technological firm and
thus, it is crucial for the company to secure their inventions along with concepts.
Thus, the company made use of tools such as trademark, copyright, patent and so
forth for protecting intellectual property right (Ireta Sanchez, 2022).
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 Branding of organisation – The next step in the start-up process is making decision in
regards with branding of their products by which their products are recognized in
between the customers and the market.
 Incorporation – At this stage, the business transactions are being initiated by selection
of any of the mode such as partnership, limited and sole proprietorship company.
Ensoft limited is a sole proprietorship.
 Preparation of the business plan – This is the stage where business plan is being
formulated which involves objectives, mission, goals and vision of the business. This
is being regarded as one of the most crucial elements that offers direction and
guidance to the workers at the time of giving their performance within the company
(Barringer and Ireland, 2014).
 Fixation of workplace – This is the phase where the business needs to be conducted
and who will be the leader is fixed.
 Determination of leader – This is the stage where there is a requirement of
determining the leaders which leads the whole firm as a team.
 Captivating help of outsiders – It involves discussing with the professionals for
attaining solutions of issues.
 Raise of capital – This is last step which involves funding for initiating the operation
of the business. Without this, it is not possible to initiate the business effectively and
successfully (Mariotti and Glackin, 2016).
Business concept and competitive advantage
Talking in relation with the business concept, seeking support from this evaluation, it
becomes quite easy to comprehend in regards with the products and services, target segment
and marketing approaches of the business. From the evaluation of the business concept of the
company Ensoft limited, it has been observed that the main aim of the firm is to develop the
software for offering quality as well as security (Omolara, 2018). The target market of the
firm is the construction company. On the other hand, the current marketing strategy of the
firm is that they make use of online channel for spreading awareness in the market. There are
varied sources which supports the firm in attaining competitiveness in their operations is
being elaborated below:
 Workers – They are being regarded as the main resource of the firm. The skills as well
as the knowledge is unique and can’t be imitated by others. The workers of the
company are efficient and then they help the firm in attaining their goals.
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 Structure and culture – A strong of Ensoft limited helps in removing differences
between the workers and facilitates effective communication within the firm.
 Process and practices – further, the process along with the practices also supports the
firm in creating unique features in their products which are different from their
rivalries. It supports the firm in building software that enhances their image (Ali,
2022).
 Technologies – Another important competitive advantage of the company is emerging
new software technologies. This has allowed the firm to survive in the market
effectively. Varied technologies which the firm utilizes are cloud technologies,
wireless techniques and so forth.
Present amount of demand and competitive environment
Present amount of demand
From the evaluation of the market, it has been detected that the demand of diverse
software of Ensoft limited is quite high in the market. This is due to the fact that the
customers of the firm get the readymade software that offers safety, management as well as
quality variation topographies. In addition to this, it also allows them to attain their work with
more efficiency. Some of the software which is utilized by the reputed firms encompasses
road master and Barbeque software. Speaking in relation with UK, it has a rich history in
relation with innovation as well as technical prowess and that can be viewed in the huge
growth in software engineering. Furthermore, it has also been estimated that the software
market had total earnings of $23.7bn in the year 2019 and is representing a compound annual
growth rate of 12.7 percent amid the year 2015 and 2019. From this, it can be said that the
technology and software industry has made billion dollar gains internationally over the last
few years because the businesses and the individuals have now become dependent on the
electronic devices in different facets of their lives after and throughout the period of covid19
pandemic (Williams, 2014). The utilization of mobile and smartphone devices has been
augmented in the recent years and thus, the amount of software on each mobile devices will
initiate to comprehend the manners in which the main software developers are important and
crucial in this present smart device world.
Competitive environment
Talking in relation with the competitive environment, it has been originated that in the
technological field, there is high level of competition in the markets of United Kingdom.
Because of the influence of Brexit, there are numerous initiatives being undertaken by the
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government which helps small entrepreneurs to flourish their business. Due to this, there is
high level of competition in the market wherein different other business corporations are
functioning and offering same type of software (Radziwon and Bogers, 2019). One of the
main factors that requires to be comprehended suitably by the company is competition. This
is due to the fact that with this, the firm will be in a position garb good position in the market
and will be able to gain competitive edge over the other rivalry firms operating in the same
market. There are different competitors of Ensoft limited which are present in the
marketplace and are conducting the business at target market for longer period of time.
Furthermore, it has also been evaluated that they are putting immense influence on the
operations, functioning, productivity, profit margins and reputation of the company
(Radziwon and Bogers, 2019). For gaining competitive advantage, it is the company is
developing different strategies and approaches which are helping them in realizing the ways
being adopted by their competitors. Through this Ensoft limited is making effective decisions
which is leading them towards the path of success and enabling them to give strong
competition and challenges to their rivalries. In the current scenario, it can be located that
United Kingdom is already carrying an ample number of software firms which are delivering
its software to their customers. Thus, it is creating a complex situation for the firm where they
are finding it difficult to expand their business in UK.
Growth as well as evolution of the business to date
Speaking in volume in relation with the growth as well as development of Ensoft
limited, the company has achieved immense success around the years by offering tremendous
products and services to the customers in UK. In the context of the past performance of the
company, over the years, the total assets of the company have been increasing that is in the
year 2012, the total asset of the firm was around £5648346, in 2015 it was £7332151 and now
in the year 2019 it was almost £10597410. Other than this, talking about the number of
workers being employed by the company, it has been originated that in the year 2012 the
company has given employment opportunities to 42 workers, in 2014 to 44, in 2016 to 65, in
2018 68 and now they are employing around 73 employees. From the last 21 years, Ensoff
limited has become highly successful along with stable business that they have been in the
computer networking as well as software business. In addition to this, the company has
ranked third best company among the list of 100 small companies (Ensoft, 2021).
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Challenges of managing and running the SME
There are different challenges being involved in the management and effective
running of small and medium enterprise like Ensoff limited company and these are as
follows:
 Lack of funds – Money issue is being regarded as one of the crucial issues being faced
by the company. The firm does not have enough amount of cash flow for keeping up
with the payroll, lights up and making the condition stable.
 Increasing brand awareness – For a small brand, it becomes quite difficult to make
their customer know who they are and in what manner they can purchase from them.
Building an audience is more valuable as compared to direct sales due to the fact that
the main objective of running marketing campaign is creating awareness of the brand.
 Ineffective web presence – In general marketing can result in to different issues for
small business such as Ensoft limited. Advertising is very expensive and the word of
mouth is also very slow moving. The internet offers opportunities to search for the
clients without costing anything, however small and medium enterprise does not do
enough with their online presence (Ferraris, Santoro and Pellicelli, 2020).
 Hiring new workers – This is also another challenge which the company faces while
managing as well as running small and medium enterprise. The cost of hiring workers
is very high because it involves different elements such as taxes, equipment, bonuses,
benefits and so forth. Without workers, it becomes quite impossible to run and
manage successful small business.
Analysis of the current growth and development strategy of SME
Talking in relation with the growth and evolution strategy of Ensoft limited, it can be
well understood by seeking help from the Ansoff growth matrix. This is being referred as the
model which is being utilized by the firm for determining alternative growth strategies by
evaluating their products in the present as well as future markets. Such type of growth
strategies is the market development, market penetration, product development and
diversification strategy. In relation with the market development strategy, the company make
use of internet for targeting new segment of customer as well as geographic markets.
Furthermore, in relation with market penetration strategy, the company make use of internet
for competing more effectively online, improvement in the loyalty of the customer by
migrating the existing clients towards online platforms and augmenting the customer value
through increasing the profitability and decreasing cost to serve. In regards with
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diversification strategy, Esnoft limited is also making use of internet for diversifying into
unrelated business and adopting downstream integration (Kuivalainen and et.al, 2015).
Additionally, they are also adding value to their existing products and altering payment
methods in their product development strategies. Thus, these all growth and development
strategies are essential for the company to augment their sales, share in the market and
profitability of their software products and services.
Government support schemes available to the business
At times when the small and medium businesses are searching for the funding options
then undertaking a small informed choice is very much essential. Since, the government is
responding to the issues of the economic slowdown, there are many new support schemes
have been executed for supplementing as well as building a private sector provision and
SMEs, which is the reason behind most of the programmes are being delivered by the
intermediaries instead of the central government directly. As discussed above there are
different challenges being faced by the company such as lack of access to finance, lack of
information infrastructure for small and medium enterprise, low level of business research
and development in this sector and so forth. For tackling these challenges there are varied
government support measures and remedies such as Credit Guarantee Scheme, specialized
private banks for SME financing, hometown investment trust funds, OECD SME and
Entrepreneurship and SME credit risk databases. Out of these, the Funding for Lending
Scheme (FLS) is being regarded as one of the most important support schemes for SMEs.
Seeking help from this scheme, building societies and SMEs can borrow the amount at
cheaper rates from the Bank of England for a certain period of time up to four years (Arráiz,
Meléndez and Stucchi, 2014). This scheme as first launched in the year 2012 for the purpose
of boosting the confidence level of the consumers along with the small businesses and
supporting them with the demand for finance and decreasing the cost of credit.
CONCLUSION
Thus, from the above analysis, it has been concluded that for effective management
and running of small and medium business, the business owners and entrepreneurs are
required to take into account several factors which are available in the market. They will offer
different prospects for making improvement in their comprehension and execute the
strategies as per that. From the above analysis, it has been originated that Ensoft limited
company is a small organization which offers readymade software to customers. Seeking
support from the above evaluation and varied steps of development strategy, important
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contribution has been made towards the achievement of the sustainability in the operation of
the company.
RECOMMENDATIONS
From the analysis, it has been evaluated that the SMEs in most of the circumstances
outnumbers the large organizations with wide margins. However, for the future growth and
development, it is highly recommended that SMEs should harness the potential of latest
technology and must develop agility by horizontal management (Gieraga, 2014). Other than
this, it is also crucial that the small business should never be subservient to one firm as a sub-
section of their supply chain however they can be a sub-section of the value chain of an
industry or company. It is also crucial for the firm to involve and make efforts towards
corporate social responsibility. For this, it is vital that Ensoft limited to develop sustainability
and social goals as the firm has an opportunity to do so. In this regard they can get the
certification of ISO14001which is being regarded as the best method of making sure that the
business is social as well as environmentally responsible.
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REFERENCES
Books and journals
Ali, A.E.S., 2022. The Challenges of Islamic Trade Finance in Promoting SMEs in IsDB
Member Countries. Springer Books.
Arráiz, I.M., Meléndez and Stucchi, R., 2014. Partial Credit Guarantees and Firm
Performance: Evidence from Colombia. Small Business Economics. 43(3). pp.711–724.
Barringer, B.R. and Ireland, R.D., 2014. Entrepreneurship: Successfully Launching New
Ventures, Pearson International.
Burns, P., 2018. New Venture Creation: a framework for entrepreneurial start-ups, 2nded.
Basingstoke, Palgrave McMillan.
Ferraris, A., Santoro, G. and Pellicelli, A.C., 2020. Openness of public governments in smart
cities: Removing the barriers for innovation and entrepreneurship. International
Entrepreneurship and Management Journal. 16.pp.1259–1280.
Gieraga, J., 2014. Human resources management in the context of new market background.
SAGE.
Herr, H. and Nettekoven, Z.M., 2017. The role of small and medium sized enterprises in
development what can be learned from the German experience? Berlin.
Ireta Sanchez, J.M., 2022. Attributes of scaling up SMEs in the IT sector towards sustaining
high-performance business results. Journal of Entrepreneurship in Emerging
Economies.
Kuivalainen, O., Saarenketo, S., Torkkeli, L. and Puumalainen, K., 2015. International
entrepreneurship among Finnish SMEs. Turku, Turku School of Economics.
Mariotti, S. and Glackin, C., 2016. Entrepreneurship Starting and operating a small business.
Pearson.
Omolara, E.A., 2018. Entrepreneurial skills and growth of Small and Medium Enterprise
(SMEs): A comparative analysis of Nigerian entrepreneurs and Minority entrepreneurs
in the UK. International Journal of Academic Research in Business and Social Science.
8(5). pp.27-46.
Radziwon, A. and Bogers, M., 2019. Open innovation in SMEs: Exploring inter-
organizational relationships in an ecosystem. Technological Forecasting and Social
Change. 146. pp.573–587.
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Scarborough, N.M., 2014. Effective Small Business Management: an entrepreneurial
approach, Pearson Education Inc, New Jersey.
Williams, S., 2014. The Financial Times Guide to Business Start-up, Pearson Education,
Harlow.
Online references
Ensoft. 2021. [Online]. Available through: < https://www.ensoftc.com/>. [Accessed on
10thMay 2022].
Yoshino, N. and Hesary, F.T., 2017. Solutions for small and medium-sized enterprises’
difficulties in accessing finance: Asian experiences. [Online]. Available through:
<https://www.adb.org/sites/default/files/publication/348741/adbi-wp768.pdf>.
[Accessed on 10thMay 2022].
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