What's the significance of cash and low profitability to SMEs during difficult economic times and how can SME proof their company to ensure they survive in a very challenging environment?

WRITTEN ASSIGNMENT        2
WRITTEN ASSIGNMENT
Table of contents
Significance of cash and low profitability to SMEs during difficult economic times and how can SME proof their company to ensure they survive in a very challenging environment    3
Introduction    3
Overview    3
Importance of Cash and Low Profitability to SMEs    4
Strategies for SME Survival    5
Conclusion    7
References    8
    
Significance of cash and low profitability to SMEs during difficult economic times and how can SME proof their company to ensure they survive in a very challenging environment
Introduction
    Small and medium-sized enterprises (SMEs) play a significant role in the economic development of countries. However, SMEs are vulnerable to economic downturns, and their survival during difficult times is often a challenge. One of the most critical factors that affect SMEs during tough economic times is the availability of cash and low profitability. This report examines the significance of cash and low profitability to SMEs during difficult economic times and strategies that SMEs can adopt to survive in such challenging environments.
Overview
    The importance of cash and low profitability cannot be overstated when it comes to the survival of SMEs during difficult economic times (Hoang, Xiao & Akbar, 2019). A lack of cash reserves and low profitability can limit the ability of SMEs to meet their financial obligations, pay suppliers and employees, and invest in growth. This can lead to reduced access to essential supplies and raw materials, employee turnover, decreased productivity, and hindered competitiveness. To ensure the survival of SMEs during difficult economic times, they must adopt effective strategies to manage cash flow, reduce operating costs, diversify their revenue streams, seek financial support, increase marketing efforts, and embrace digital transformation. By implementing these strategies, SMEs can become more resilient to economic downturns, adapt to changing market conditions, and emerge stronger.
Importance of Cash and Low Profitability to SMEs
    Cash is a crucial resource for any business, and SMEs are no exception. For SMEs to fulfill their financial commitments, such as paying suppliers, workers, and lenders, they must have enough cash reserves. SMEs' cash flow can be negatively influenced by trying economic conditions, such as a recession or slump. Poor profitability is a major worry for SMBs in challenging economic times (Zimon & Tarighi, 2021). The capacity of a firm to make money off its activities is referred to as profitability. A decline in revenue, a rise in operating costs, or both might result in low profitability. It may result in decreased cash flow and make it difficult for SMEs to fulfill their financial commitments. Low profitability can occasionally result in bankruptcy.
    SMEs that experience low profitability and a lack of cash flow can face several challenges. These include:
· Failure to pay suppliers on time: When SMEs fail to pay their suppliers on time, supplier relationships may fall apart. Less access to necessary resources and raw materials may result from...