CHAPTER 2

REVIEW OF RELATED LITERATURE AND STUDIES

This chapter presents the related literature and studies after the detailed and in-

depth search done by the researchers from the internet.

FOREIGN LITERATURE
An article from The Ask “The Experts” dated February 22, 2017 by Simon Dell

entitled "Which Female Entrepreneur Inspires You & Why?" It discussed the biggest

challenge affecting in small businesses. Cash flow, the problem stems from a domino effect

of one business having a profitability earlier on in the chain that then starts to directly effect

all the small businesses. Not only the cash flow is the common problem and also the

competitors affect the business by taking your costumers. It occurs in to small businesses

that do not have the ability to fix this problem.

The simple purpose of these problems is to experience business problems and

overcome it to create a better and successful business.

Dugguh (2013) further stated small businesses must develop strategies that will

mitigate challenges and sustain operations.

This literature is related to the current study of the Common problems of the small

enterprise. Before to start a business, the owner/s should create a plan for the business.

Planning plays a very important role in the business, it recognizes the nature of business

and distinguish the strategies will be used for running a business; and also, detecting the

threats for the business.

6
 According to Lampadarios (2016), the enterprise success factors of small

businesses include age and size of the company, business network, customer relations

management, financial resources, internationalization, human capital, market and product

development, marketing, and strategic planning.

The success is never easy especially in doing a business. Success requires strong

foundation such as money or capital in starting a business, communication between

employees and/ or co-workers, listening and communication skills can help the business to

gain loyal customers. Product or service development can determine the success of the

business and how to market the product or services.

LOCAL LITERATURE
According to Chua (2004), when starting a business enterprise, it is vital to have a

perspective of the whole business or path that one wants to take, or a clearly defined

business model. Even at the basic level, the various business functions have been

considered: production/operations, marketing, organization and finance.

Success starts at the bottom, good foundations like capital, customers, location,

employees, product and/or services, skills and etc. can help the business to prevent or

minimize the problems for the future of the business.

FOREIGN STUDIES

This foreign studies from Academic journal article International journal of

entrepreneurship by Ruane, Maria Claret M. states that since the 1990s, there has been a

resurgence of interest on the role of small-scaled business enterprises or small and medium

enterprises (both will be referred to as "SMEs" hereafter) in national and international

7
economic and social development. This is consistent with the overall shift of development

strategies in many countries toward a more decentralized, even localized, approach. As

such, many scholars, practitioners, and institutions involved in economic development

have begun to recognize the important roles that smaller-scale business entities play in the

economy and society. More and more people are becoming convinced that these entities

can be a very effective means of achieving, not only economic progress, but social goals

(e.g., a more equal income and a greater appreciation for diversity in gender and race) as

well. All of these suggest a greater need to increase our understanding of the nature and

capabilities of family businesses and SMEs and the kinds of policies and incentive systems

that would be appropriate, necessary, and effective in encouraging and strengthening them.

The researchers can relate this study to their research in terms of knowing the

problems or common problems of a small-scale businesses so the entrepreneurs and

business owner must have an idea on how to solve and carry the problems that they may

encounter.

LOCAL STUDIES

Start-up money can help the owners to create their own business. According to the

study of Rafaelita M. Aldaba (2012) Small and Medium Enterprises' (SMEs) Access to

Finance: Philippines. “SME’s particularly the smaller ones have been unable to access

funds due to their limited track record, limited acceptable collateral, and inadequate

financial statements and business plans.”

8
 Similarly to the researcher’s study, business plans are very important for both

owner/s and the business. Knowing the possible problems particularly on cash and

opportunities for the firm can help the business to continue for many years.

According to Reyes (2012) in her study entitled “Rural Micro-Enterprise

Promotion Program: An Assessment on the Impact of the Financing Delivery Role of Small

Business Corporation to MSMEs in Albay, Ragay and Sipocot Camarines Sur”, R.A. 9178

otherwise known as the Barangay Micro Business Enterprise Act of 2002 provided

assistance to the micro businesses through offering incentives and benefits for these firms.

One major incentive is the income tax exception awarded to the registered BMBEs. The

aim of the law is to incorporate the micro enterprises to the mainstream economy since

they contribute a lot to the economic growth. Also, its aim is to strengthen the said sector

thus leading to job creation, livelihood and better quality of life of Filipinos.