Author(s):
1. Jaroslav Belás, 2. Přemysl Bartoš, Tomas Bata University in Zlín Faculty of Management and Economics, Czech Republic

Abstract:
Small and medium-sized enterprises (SME) have specific features and fulfill important tasks in the economic system. SME is significantly contributed to an employment and GDP, helps to create more intense competitive environment which has a great importance in relation to prices and quality of products and services. SME helps with their flexibility to fill the market space and they are bearer of important innovations. Share of SME in total number of active enterprises in the Czech Republic in 2012 was 99,86 %. Share of added value in 2012 was 53,81 %. Share of SME’s employees in total employment in business sector in the Czech Republic in 2012 was 59,43 %. In the Slovakia, share of SME in total number of active enterprises was 99,2 %, in total employment was 72,2 %. Share of added value was 55,6 % and share of SME in profit before taxes was 51,6 %. Political leaders of the European Union and individual European countries declare an increased level of interest in this business segment. However, real business practice indicates that this kind of companies receive significantly lower level of support from governments than big companies (for example a lack of investment incentives, tax reliefs, more difficulties with access to credit financing, too administratively and legislatively overloaded etc.). At the same time, society perceives a position of entrepreneurs rather negative than positive. Weaknesses of SME include insufficient capital resources; poor focus on marketing because of limited finances; limited funds for technical equipment of companies; protection of intellectual property rights; preponderance of production with low added value; insufficient focus on human resource development. Main source of SME’s financing is to use an owner’s equity (own savings, family’s money, member deposits etc.). The most important source of liabilities in the Czech Republic and Slovakia is a bank’s loan. A relatively higher cost of lower loan volume and higher risk of lender does not make from small and medium enterprises the most popular clients of banks. Another disadvantage in this area is a fact that SME does not usually have high levels of intangible and tangible fixed assets and have more problems with a security equipment. The global financial crisis has raised legitimate concerns about what kind of procedures in relation to debt financing of a corporate sector will be up there. Current signals confirm that banks have responded to their clients by tightening financial conditions, loan volume, and interest and non-interest terms. The aim of an article is to define a current business risk of SME in the Czech Republic and Slovakia. In this context, own research has been prepared and gradually implement where the intensity of individual business risks, status, motivation and feelings of entrepreneurs in SME segment are analyzed. Research is focused on the area of SME financing. Within a research, quality of financial risks management in SME segment and attitudes of banks to SMEs are analyzed and the financial literacy of SME in the context of credit financing is examined.

Key words:
small and medium enterprises, motives for entrepreneurship, business risks, SME financing, bank’s loans.

Date of abstract submission:
14.09.2013.

Conference:
REDETE 2014 - Researching Economic Development and Entrepreneurship in Transition Economies