Best Ways to Grow Small Business

Small businesses continue to exist because of their importance to the overall economy of nations. According to the World Bank, in emerging economies, small and medium-sized enterprises (SMEs) make a substantial contribution, accounting for up to 40% of the national income (GDP). Van & Suddle (2005) underscore the key role played by new businesses in fostering job creation saying SMEs wield significant influence, contributing an impressive 60% on average to total employment within the manufacturing sector, across both advanced and developing economies.

Fortunely reports that about 29% of businesses fail due to cash shortages in their first year, highlighting the critical role of cash flow in daily business operations, especially in the face of current inflation challenges affecting SMEs and MSMEs. Considering this multifaceted significance, it is undeniably evident that having sufficient cash resources is absolutely essential in influencing the complex dynamics that control SMEs and micro, small, and medium-sized enterprises (MSMEs), especially within the intricate network of the supply chain. Which shows an urgent need for financial partners within the ecosystem.

In response to this, a number of start-ups came up to provide responses to these pressing issues SMEs and MSMEs face, one of which is Vendor Credit, a start-up providing financial solutions and posing as a growth partner for micro and small businesses. Taking on this role shows that they recognize the strategic importance of cash in the entire supply chain ecosystem, and its potential to drive growth, optimize operations, and promote collaboration. Their mission is to minimize risk by offering financially tailored products and services to their network of suppliers and vendors.

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Acknowledging that cash flow challenges can lead to a downward spiral in business, Vendor Credit addresses these issues by providing collateral-free funding within stipulated time. They also combat inflation-related problems by supplying funds to the supply chain industry, mitigating the impact of current inflation rates.

A prominent example of cash flow and inflation challenges occurred in a business located in Abeokuta, Ogun state, Nigeria. Despite receiving a substantial purchase order, the business faced cash flow constraints due to a significant portion of its capital being tied up in unpaid invoices. Constrained by bureaucratic hurdles, high collateral requirements, and steep interest rates, traditional bank loans were not an option. Vendor Credit stepped in swiftly, offering Purchase Order Financing and Invoice Discounting decisions within 48 hours. This allowed the business to promptly fulfill the purchase order and expand operations, including the opening of larger branches and hiring additional staff to meet surging demand.

In conclusion, addressing recurring challenges that confront early-stage businesses is paramount for sustainable growth. A financial partner is as indispensable as the existence of the business itself. Vendor Credit goes beyond mere financial support; they act as catalysts for growth, innovation, efficiency, collaboration, and risk mitigation within the supply chain industry. As the supply chain ecosystem evolves, the role of a financial partner remains indispensable.

Source: The guardian