Page 28 - IMDR MSME BOOK 2021

Managing Finance in Micro, Small & Medium Enterprises
Chapter 3
Research Methodology

Finance is the backbone of every business enterprise. It
must be managed effectively so that there arises no
waste of physical and nancial resources. It has been a
critical success factor for the organization. The MSMEs
have a restricted source of nance, input, and
technology. So, they must be more careful in utilizing
them. All the entrepreneurs have the main objective of
maximizing growth. The focus has been on the increase
of protability, turnover and long-term growth.
Sometimes, this has been achieved at the expense of
short-term protability on the return on capital. This
situation may not be necessarily due to lack of capital or
nance, but also due to poor management of funds. Lack
of nancial management has been limiting the growth of
any enterprise; and at the same time, the utilization of
funds got affected the use of all the other resources. Any
type of entrepreneurial activity concerned with
production, marketing, personnel, and the like,
ultimately revolves around the availability of nancial
resources.
Financial Management has been the key factor which
determines whether a business will be successful in the
long run. In the case of MSMEs, gaining prot got
affected by a number of factors, like innovative
productivity, credit availability, market for their
products, skilled labours and prudent nancial
management. Out of the above factors, management of
nance has been very important as this affects the day to
day running of the rm. Therefore, along with
protability, liquidity is also very important for any
enterprise. The twin factors of protability and liquidity
can be achieved if a rm has got good nancial