Disadvantages of Small and Medium Enterprises

  • It’s not easy for them to obtain a loan from the Banks like large enterprises since they don’t have enough collateral security to use when applying for a loan.
  • They easily collapse as soon as the owners die since the life depends on the owner of the business.
  • Face shortage of skilled manpower to manage the business. In most cases family labour is used which lack required skills and there is no money to employ expertise.
  • They frequently suffer from customers changing tastes and preferences and this impacts negatively on small and medium enterprises.
  • They have shortage of facilities especially for perishable goods due to poor technology.
  • They produce low quality products leading to limited market
  • They don’t compete favourable with big enterprises. Due to the fact that small and medium enterprises do not enjoy economies of scale, they are easily out competed