Over the past two years, the world has faced a financial crisis considered by many to be the most important in decades. The mass media has focused on the impact of the crisis on big companies like General Motors, Chrysler, Merrill Lynch, Lehman Brothers Holding Inc., Fannie Mae and Freddie Mac, and Nortel. Very little has been said about small and me­dium-sized businesses like realtors and car dealers who have closed doors leaving many people without jobs. Yet, small and medium-sized enterprises (SMEs) are probably affected more seriously by this crisis than large firms as they have “the weakest financial structure and lower credit rating” (OECD, 2008). At a round table organized by the OECD in Turin (OECD, 2009: 3) on this issue, “Several speakers noted that the situation regarding the working capital had deteriorated rapidly at the end of 2008 and worsened in the first quarter of 2009. There is evidence that if steps are not taken to resolve the liquidity crisis, SME exits will increase in the near future”. A Business De­velopment Bank of Canada (BDC) survey (2009) confirms this situation finding that, of all entrepreneurs studied, 39% had experienced a tightening of credit and 46 % were recently seeking financing. Among these, 71% were seeking credit for operating lines.

 

This issue of SMEE Review has eight contributions that focus on the financial issues in SMEs and the search of op­portunities for a sustainable growth in times of crisis.

 

In his interview with Sarah Bultitude, Paul J. Hill draws a broad picture of the financial turmoil the world is facing and concludes with the measures that SMEs should undertake to survive. In the past, banks and business angels have been found as being the major institutional and informal sources of debt used by Canadian SMEs (Equinox, 2002). Ian G. Toms leans on his great deal of experience in the banking credit sector to outline the most important steps and document contents that an SME should look at when applying for funds from the bank. In his interview with Sarah Bultitude, Bryan Watson, the Executive Director of the National Angel Capital Organization, does the same exercise and focuses on the requirements necessary for an SME to be successful in acquiring funding from business angels. To complete this tour on SME financing, Arturo Rubalcava has reviewed a textbook that highlights SME financial concepts and documents in an accessible and less esoteric manner.

 

In the times of crisis, in addition to the financial crunch, SMEs are also facing the challenge to identify op­portunities. In their paper on the environmentally friendly resort properties in Canada, Magdalena Cismaru, Kristina Nelson, and Greg Elliott propose a process to identifying business opportunities. In their contribution, Donald E. O’Neal and Mark Pruett suggest looking at biological organ­isms to find inspiration for long-term organizational sur­vival, or longevity. For J. Terence Zinger, ‘profitability tiers’ technique is a promising practice that could help SMEs to refine their service offerings and marketing programs leading to sustainable success. Then, Prescott C. Ensign and Nicholas P. Robinson present a case about an entrepreneur who had a so much confidence in his products in the area of protective clothing that he tested them himself with real bombs. This translated his confidence to buyers worldwide and made him a global leader in this line of garments. Finally, Xiaohua Lin and Derek N. Hassay found in their paper that the increasing presence of immigrant minorities in the area of direct selling is more a matter of necessity rather than opportunity. This means that in the times of difficulties, entrepreneurs can embrace activities that allow them to survive instead of doing what things for which they the most qualified.

 

We hope that these papers will excite your thoughts about the actions that SMEs and entrepreneurs should un­dertake in this time of crisis and beyond. Your feedback (via SMEE.Review@uregina.ca) on the issues raised and others that come to mind will be appreciated. Let me take this opportunity to thank those of you who gave feedback on the previous issues of the journal. We could not publish your reactions without your authorization. In the future, please let us know if we can share your thoughts with other readers. A room for reader’s feedback by e-mail is open. In addition to the hard version, this journal is posted on the websites of the University of Regina, the CCSBE, the ICSB, and other organizations that have expressed an interest to do so.

 

Many people have contributed to the publication of the current issue. Let me first thank the anonymous reviewers whose comments have improved the quality of the papers. Many thanks to my colleague Robert Anderson, the editor of the JSBE for his advice and encouragement.

 

Follow this link to access this issue of the SMEE review.