Three Taboos For SME Financing

For a long time, just like the oil problem is bothering the world economy.

SMEs are often deficient, such as their ownership.

1. pulse the "stubborn disease" of SME governance

In Chen Wei's view, many small and medium-sized enterprises have grown up from the "cracks" in the market, and there are serious "congenital deficiencies".

From state investment to bank loans, policies and regulations tend to tilt towards large enterprises. Such enterprises are almost inseparable, and their corporate governance structure can not be standardized like big enterprises.

He pointed out that the high failure rate of SMEs is mainly related to the lack of governance structure and the long-term belief in the three major rules of the game.

Lack of supervision and risk control is the primary "stubborn disease" of SMEs in corporate governance.

The standard corporate governance structure should include shareholders' meeting, board of directors, managers, supervisors, etc., especially in listed companies, the structure is clearer.

But some SMEs believe in blood and do not believe in the system. The primitive capital accumulation of such enterprises often comes from relatives and friends. In many cases, enterprises are "home world".

Therefore, in the management of small and medium-sized enterprises, the actual leaders are often in the same number of jobs, and the governance structure is seriously distorted.

In the early stage of growth, this type of enterprise can run very fast because of its very convenient decision-making and execution. However, due to the lack of corresponding prevention and restraint mechanism in management, the consequences will be fatal once the "master" has made significant mistakes.

Secondly, many small and medium-sized enterprises believe in public relations and do not follow the procedures. From the start of business registration, they are keen to "go the way", engage in false capital injection and make false statements, and think that as long as they can get rid of the "immortals", they will be able to get business and make a profit.

Finally, the leadership's superstition technology and neglect of management are also the root causes of the failure of SMEs' financing or operation.

Leaders of such enterprises are mostly young technical experts who always feel that they are "able to get even missiles". What is more, a small enterprise is not fully aware of the importance of management, especially governance structure, to enterprises.

2. three "taboo" for fund regulation

Chen Wei made further diagnoses on the corporate governance of small and medium-sized enterprises, and listed three kinds of "taboo".

First, avoid corruption and strive for perfection and blindly diversify.

At present, the management circles generally believe that there must be two prerequisites for diversification: one is core industries, the other two is related industries.

"It's very difficult to resist the temptation to be a business or a person, so we often see that some enterprises are still science and technology enterprises today. They will enter the real estate tomorrow and develop entertainment projects the day after tomorrow, and the baton of strategy is just a profit."

Chen Wei commented, "in fact, they have no strength to diversify.

Small and medium-sized enterprises are too short of money, so they can see what they earn and do what they want to do, often putting the cart before the horse and forgetting their original intention of starting a business.

Venture capitalists favour businesses that are intent on doing one thing and not being tempted by others.

Two, we should avoid building land as landlord and not paying attention to asset structure allocation.

Chen Wei believes that the development of funds is the "gate of life" for SMEs. Therefore, it is more necessary to do well in cost control, make a preparation for spending two yuan on a piece of money, and put money on the "knife edge" - first replenish the working capital, so that the money can "generate money" for enterprises as soon as possible.

It is not too late to reinvest in real estate and ask for advice when funds are strong enough. Otherwise, a large amount of capital investment will easily become a "stagnant pool".

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Three bogey will make short-term funds for long-term arrangement.

Efficient capital flow is an important factor for small and medium-sized enterprises to survive. Because banks are less lending to small and medium enterprises, it is particularly important for them to maintain liquidity.

3. three prescriptions: (creativity + capital) * executive ability

"Comply with the doctor's advice, do not eat" taboo, "smooth blood -- improve the corporate governance structure, small and medium enterprises can grow healthily under congenital deficiency.

Chen Wei slowly said that the tone was like an old Chinese medicine doctor with many years of experience.

He believes that SMEs should work hard to strengthen their credibility and avoid strategic mistakes, while constantly improving their corporate governance structure while expanding their own strength.

"SMEs should maintain good relations with investors and maintain integrity.

When we invest, we often encounter such a situation. In the early stage of financing, when you are "Grandpa", give him money, you will become "grandson".

This situation causes mutual distrust between the financiers and investors, and the follow-up funds needed for the development of enterprises are also difficult to guarantee.

Chen Wei said.

Honesty should also be reflected between employers and employees.

Because in the small and medium enterprises that have the opportunity to obtain financing, the technology oriented companies are the majority, and many core technologies are in the hands of core employees.

"The problem of big business in this area is not so serious. Even if the senior executives leave, it will not cause a fatal blow to the company. For example, after Li Kaifu joined Google, Microsoft is still the Microsoft."

Chen Wei, for example, said, "but small and medium-sized enterprises are different. In many cases, enterprises are tied up with skilled workers. When the core technicians leave, enterprises are not far away from bankruptcy."

Therefore, in the initial stage of investment, venture capitalists usually require the core employees of the invested enterprises to join the management by technology, so that they can be relatively stable and sign contracts with them. Even if they leave, they are not allowed to re engage in the industry for a number of years.

Chen Wei finally stressed that it is not easy to do business, and it is very difficult for investors to draw money out of their pockets willingly.

Therefore, SMEs in the financing environment is difficult to prepare for the first blow.

At the same time, he also set out three prescriptions for small and medium-sized enterprises according to his own experience: first, it is necessary to have good ideas, which are both logical and practical; second, enthusiasm and passion are the greatest driving force; third, execution is the executive force.

Therefore, financing success is equal to (creativity + capital) * execution.