H2106979

American International Journal of Business Management (AIJBM)
ISSN- 2379-106X, www.aijbm.comVolume 2, Issue 10 (October 2019), PP 69-79
*Corresponding Author:1
Pham Cong Do www.aijbm.com 69 | Page
Factors Affecting Access to Finance By Small and Medium
Enterprises In Vietnam
1
Pham Cong Do, 2
Dr. Vo Tan Phong, 3
Dr. Phan Van Thuong,
4
Dr. Nguyen Hoang Tien, 5
Dr. Ha Van Dung
1
Thu Dau Mot University
2
Lac Hong University
3
Hong Bang International University
4
Saigon International University
5
Ho Chi Minh City Banking University
*Corresponding Author: 4
Nguyen Hoang Tien
ABSTRACT:-The small and medium-sized enterprises (SMEs) play an important role for economic growth in
Vietnam. Access to finance is necessary in order to initiate, operate, develop and facilitate growth conditions of
all businesses. Therefore, this study aims to determine factors affecting access to finance of SMEs in Vietnam.
The study adopted a survey research design that employed a stratified random sampling. The primary data was
collected from 400 SMEs via structured questionnaires. The Cronbach’s Alpha testing methods, the exploratory
factor analysis (EFA), ANOVA analysis and multivariate linear regression analysis were used in this study. The
study results indicate that there are six factors significantly affecting access to finance of SMEs in Vietnam
including managerial experience, the owner-manager’s financial literacy, business plan, financial management
regulations, the owner-manager’s education and business size.
Key words:Access to finance, small and medium-sized enterprises, Binh Duong Province
I. INTRODUCTION
According to Nguyen ThiHien (2017) and the statistics of Ministry of Planning and Investment, as of
April 20, 2017, there are around 612,000 businesses operating in Vietnam, of which about 97% are SMEs,
contributing around 45% of GDP, 31% of total budget revenue and employing more than 5 million workers.
However, small and medium-sized enterprises usually have difficulties to access the bank capital. Currently,
only about one third of SMEs (less than 36%) among the operating businesses have access to bank capital.
At present, Binh Duong province has the third largest number of operating enterprises in Vietnam, only
after Ho Chi Minh City and Ha Noi. According to Binh Duong People’s Committee (2017), Gross Regional
Domestic Product (GRDP) in 2017 increased by about 9.5%, collected budget at around 1.74 billion USD;
accumulated until 2017, Binh Duong Province has 30,100 domestic enterprises with a total registered capital of
10 billion USD, accounting for more than 90% of the total number of enterprises in the province. 97% of
domestic enterprises are small and medium-sized enterprises. Domestic enterprises are employing more than
386,000 employees, accounting for 40% of the working population in the province. However, limited capital has
a great impact on business performance, limiting their competitiveness in medium and long term.
There are a number of previous researches on access to finance of SMEs.Harvie et al.(2013) conducted
a study on access to finance of SMEs in Asian countries. Adomako et al.(2015), Abrar-ul-hap et al.(2016)
examined the impact of access to finance on the development of SMEs. BorjiandGashu (2015), Waari and
Mwangi (2015), Osano and Languitone (2016), Mersha and Ayenew (2017) carried out a research on the
determinants of access to finance of SMEs. In Vietnam, there are many studies on access to finance of SMEs
such as VCCI and USAID (2016), UNU-WIDER and CIEM (2016).Nguyen ThiHien (2017) studied the status
of access to finance and the difficulties and obstacles of SMEs in Vietnam when accessing to finance.
A review of previous studies on access to finance of SMEs shows that access to finance has an
important role to play in the development of SMEs. Currently, there have been no studies on SMEs’ access to
finance in Binh Duong Province. In order to help SMEs in Binh Duong Province improve their access to
finance, in this study, the authors focus on studying the factors affecting access to finance of SMEs in Binh
Duong Province.
II. LITERATURE REVIEW
2.1. Definition of SMEs

Factors Affecting Access to Finance By Small and Medium Enterprises In Vietnam
According to the OECD (2016), SMEs and entrepreneurs have been recognized around the world as an
important source of the dynamic, creativity and flexibility in advanced industrialized nations as well as in
emerging and developing economies. Panitchpakdi (2009), the General Secretary of the United Nations
Conference on Trade and Development, defined SMEs as the source of employment, competitiveness, dynamic
economy and innovation. Berisha and Pula (2015) argued that there is no single definition that is widely
accepted for the SMEs, the current criteria have been revised and have been always in the process of evaluation.
At this time in Vietnam, SME definition has been set out in The Law on SME issued by 04/2017/QH14
decree dated July 14, 2017 of the National Assembly. Under this law, SMEs include micro enterprises, small
and medium-sized enterprises, with an average of 200 employees participating in social insurance and satisfying
one of the following criteria: the total capital does not exceed 4.3million USD or the total revenue of the
preceding year shall not exceed 13million VND. The classification of SMEs in Binh Duong Province according
to the criteria of turnover of Government Decree No. 39/2018/NĐ-CP dated March 11, 2018 presented in the
table 1 shows that by the end of 2016, there are 13,573 SMEs operating in Binh Duong Province; according to
turnover, micro – enterprises account for 78%, followed by small and medium enterprises at 19% and 3%
respectively.
Table 1: Classification of SMEs in Binh Duong Province according to turnover
Enterprises
classification
Turnover criteria Number of
enterprises
Percentage
Micro enterprise Under 0.43 million USD 10,587 78%
Small enterprise From 0.43million to 4.3million USD 2,579 19%
Medium enterprise From over 4.3million to 13 million USD 407 3%
Total 13,573 100%
Source: Enterprise Managerial Statistics of Binh Duong Taxation Department (2017)
2.2. Factors affectingaccess to finance of SMEs
2.2.1 Managerial Experience
According to Zarook et al.(2013), managerial experience can be described as the time period that the
manager of SMEs has served with similar capability and how well they handle their tasks and their
responsibilities in these tasks. The management teams with high quality and clear track records will be able to
help SMEs access finance more easily than those with poor track records. According to Isaga (2015), previous
experiences from business management, which are demonstrated through the training of a number of skills
required to recognize and act on business opportunities, will help enterprises have the ability to increase sales,
property, capital and employment. According to Pellissier and Nenzhelele (2013), the entrepreneurs who have
who have been doing business for many years will have sufficient skills and experiences to avoid problems
impeding access to loans of SMEs and the effective use of debt will lead to the improvement of SMEs’
performances. According to VCCI (2017), effective corporate governance will increase the company’s access to
finance, enabling stakeholders accurately evaluate the operation of enterprises.
2.2.2 The owner-manager’s financial literacy
According to OECD, DFID and World Bank (2009), the financial literacy is critical to promoting
access to finance by creating incentives and environments encouraging desired financial behaviors such as
saving, budgeting or using credit wisely. Financial literacy can affect different loan and investment decisions
Harrison (2016). Adomako and Danso (2014) argue that the financial literacy that manifests through the
understanding of financial reporting and the understanding of financial ratios leads to better decision making
process and the entrepreneurs can access finance easily. Financial literacy has a positive impact on SMEs’
ability to repay their loans(Mutegi et al.,2015). The majority of SMEs’ owners have not read the financial
statements, most of them think that accounting jobs, tax reports only serve the main purpose of dealing with
government agencies; therefore, it is extremely hard to access finance (VCCI, 2016).
2.2.3 Business plan
Business plan involves setting up a company’s goals, in which strategy is outlined to achieve these
goals (Zarooket al., 2013). A good business plan helps SMEs get financial sources from banks, donors or any
other financial institutions. EgbunavàAgali (2013) argue that reasonable business plans can reduce the financial
management failures, increase productivity and profitability for SMEs.Therefore, it is easier for them to access
to finance. An effective business plan is one of the factors contributing to successful financial management,
helping businesses access finance more easily (Najib and Baroto, 2016). The adoption of business plan has
benefited SMEs in creating a fertile foundation to access finance with the formal lending financial institutions, if
SMEs can meet the collateral security requirement in order to minimize the risk involved (NajibandBaroto,
2016).
2.2.4 Financial management regulations

As stated by McMahon et al. (1993), asymmetric information was first introduced in the 1970s and has
confirmed its place in the modern economy by the event in 2001 that George Akerlof, Michael Spence and
Joseph Stiglitz, the scientists studying this theory, reveived Nobel Prize in economics. The theory presents three
important problems that are adverse selection, moral hazard – the consequence of asymmetric information
phenomenon, and signaling – the measures to limit this situation. In order to limit asymmetric information, the
theory also indicates the signaling mechanism that is the party with much information can signal the one with
less information honestly and reliably to overcome the information imbalance in the market. Solving the
asymmetric information problems between the people inside and outside the business is suggested by signal
theory.The term signaling refers to the use of real behavior to infer things you cannot observe directly or learn
them in the other ways. Thus, the signaling involves the inferences related to the asymmetric information and
actions will convey the information and eliminate asymmetric information. As pointed out by Jindrichovska
(2013), the owner/managers themselves have a firm grasp of the principles of financial management and they
are actively involved in applying them to their own situation. In Vietnam, Vietnamese enterprises are weak on
the transparency in financial management that is one of the reasons limiting access to finance (VCCI, 2017).
2.2.5 Characteristics of enterprises and enterprise owners
In the research of Adomako et al.(2015), the factors such as company size, company age, industry, age
of director, literacy, working experience and gender can explain the difference in company growth at the
influential level of financing literacy on the relationship of financial access and growth of company. Osano and
Languitone (2016) argue that the availability of collateral, the age of the business, industry, type of business, the
age of the owner or manager, the religion of the owner or manager and the size of business determine its ability
to access bank credit. Kira and He (2012) argue that the characteristics of the company such as location,
industry, size, business information, age, merger and acquisition, and collateral assets affect access to finance of
SMEs.
2.2.6 Access to finance of SMEs
Borji and Gashu (2015) argue that the formal financial institutions cannot meet the credit needs of
SMEs, because SMEs cannot meet the requirements such as business plans, managerial system, collateral assets
and other accountability issues related to business risk management. Waari and Mwangi(2015) argue that
asymmetric information, business risks and transaction costs affect access to finance of SMEs. The availability
of collateral, the age of business, the industry, the type of business, the age of the owner or manager, the religion
of the owner or manager and the size of business significantly determine the ability to access bank credit (Osano
and Languitone, 2016). According to VCCI and USAID (2016), the disadvantages of Vietnamese SMEs in
accessing finance are the lack of collateral, young businesses, insufficient managerial experience, small size and
no involvement in production networks, ineffective business plan. According to UNU-WIDER and CIEM
(2016), in 2015, on;y25% of enterprises apply for official loans and 15% of them have difficulty in obtaining
loans while larger enterprises have better access to credit.
III. RESEARCH METHODOLOGY
3.1. Conceptual framework
In this study, the authors develop a model of the factors that affect the SMEs’ access to finance, as
shown in figure 1, through the literature review of domestic and foreign literature on access to finance of SMEs.
Figure 1: Conceptual framework
Source: synthesized by authors

The dependent variable, which is access to finance, and four quantitative independent variables
(managerial experience, financial literacy of the owner, business plan and financial management regulations)
are measured by likert scale, from value 1 for completely disagree feedback to value 5 for completely agree
feedback. The characteristics of enterprise and enterprise owner include level of education of the
owner/manager of business defined by three levels (secondary and college, university and postgraduate), type of
business defined by three types (joint stock company (JSC), limited liability company (LLC), and private
company), size of business measured by total assets, age of business measured by number of years of operation.
3.2 Sampling and data collection method
According to the data of enterprise management of Tax Department of Binh Duong Province, by the
end of 2016, there are 13,573 SMEs in the Province (of which the total number of SMEs operating in three areas
of Thu Dau Mot City, ThuanAn Town and Di An Town is 9,955, accounted for 73%). The authors conducted a
survey of 600 SMEs in three areas (in which there are 196 SMEs in Thu Dau Mot City, 202 SMEs in ThuanAn
Town, 202 SMEs in Di An Town) in the form of submitting to the Tax Departments for direct delivery to
enterprises from July 2017 to December 2017. The survey results of 400 respondents (67%) are shown in Table
2.
Table 2: The summary of the number of respondents to survey questionnaires
by location and by type of business
Type of
business
Di An Town Thuan An Town Thu Dau Mot City Total Industry
% Number of
enterprises
% Number of
enterprises
% Number of
enterprises
LLC 88
%
123 88
%
114 89
%
116 353 - Wholesale, retail; repair of car,
motorcycles, motorbike, and other
motor vehicles.
- Manufacturing and processing
industry
- Agriculture – Forestry –
Aquaculture
- Architecture
- Mining industry
- Food service
JSC 6% 8 3% 4 4% 5 18
Private
compan
y
6% 8 9% 12 7% 9 29
Total 100
%
140 100
%
130 100
%
130 400
Source: Managerial enterprise statistics of Binh Duong Tax Department (2017)
IV. RESEARCH RESULTS AND DISCUSSION
To determine the factors affecting access to finance and the important of each factor to the access to
finance, the authors use SPSS 2.0 software to support the implementation of reliable testing and statistical
analysis of factors through the Cronbach’s Alpha reliability coefficient.Next, authors use the Exploratory Factor
Analysis (EFA) to test the factors affecting access to finance.After that, authors use ANOVA analysis, linear
regression analysis model.
4.1 Reliability testing of the research instrument and descriptive statistical analysis
4.1.1 Statistical results of the characteristics of enterprises and enterprises owners answered the survey
questionnaires
The statistical results of the characteristics of SMEs in Table 3 show that, in 400 respondents, the
majority of enterprises owners graduated from university (61%), and secondary and college (36%). The type of
business is mainly LLC (88%). In terms of the size of business, it is mainly the enterprises with total assets of
more than 43 thousand USD to 860thousandUSD (74%). In terms of the number of years of operation, the
enterprises operating under 5 years account for 60%, and the figure for enterprises operating from 5 to 10 years
is 28%.
Table 3: Statistical results of the characteristics of the SMEs
Level of education Type of business Size of business (asset) Number of years of operation
Secondary, College 142 JSC 18 Under 1 billion VND 56 Under 5 years 237
University 243 LLC 353 From 1 billion -20 billion VND 295 From 5 years to 10 years 112
Postgraduate 15 Private
company
29 From 20 billion -100 billion
VND
49 More than 10 years 51
Total 400 Total 400 Total 400 Total 400
Source: statistical results from survey data, 2017

4.1.2 Testing of scale reliability
The testing results of the scale in Table 4 indicate that 24 observation variables all have coefficient of
correlation of total variables greater than 0.3, all the scale have the Cronbach’s Alpha coefficient in the range of
(0.8 to 0.9), indicating that the scales are significant.
Table 4: The testing results of scale reliability
Item
code
Category Corrected Item-
Total Correlation
Cronbach's
Alpha if Item
Deleted
Managerial experience; Cronbach’s Alpha = 0.888
ME1 You are officially trained in business management 0.763 0.853
ME2 You have the skills to run a business from past experience 0.759 0.856
ME3 Managerial experience in business has helped you to improve
your skills to accept new business conditions and competitions
0.757 0.855
ME4 Managerial experience in company has helped you limit risks and
know how to deal with the risks
0.746 0.860
Financial literacy; Cronbach’s Alpha = 0.850
FL1 You regularly review financial statements 0.744 0.786
FL2 You have the ability to perform financial analysis based on
financial statements
0.584 0.852
FL3 You have the ability to make the tax return 0.722 0.796
FL4 You have the ability to make financial statements for businesses 0.713 0.801
Business plan; Cronbach’s Alpha = 0.835
BP1 Your enterprise does have a specific business plan implemented
officially
0.555 0.818
BP2 Your enterprise does look at financial resources when planning 0.666 0.796
BP3 Your enterprise does consider the strength and weakness when
planning
0.667 0.795
BP4 Your enterprise does find out the customers’ demand when
planning
0.617 0.806
BP5 Your enterprise does set out the future business goals 0.581 0.813
BP6 Your enterprise does have a budget for spending and pricing
when planning
0.561 0.817
Financial management regulations;Cronbach’s Alpha = 0.860
FMR1 Your enterprise does have formal financial management
regulations
0.731 0.819
FMR2 The financial management regulations in your enterprise detail
the contents of financial management
0.729 0.819
FMR3 The financial management regulations in your enterprise are
based on the regulations of the State
0.596 0.851
FMR4 Your enterprise regularly adjusts, adds the contents of financial
management regulations timely
0.697 0.827
FMR5 Your enterprise disseminates the financial management
regulations to all employees in the enterprise
0.652 0.840
Access to finance ; Cronbach’s Alpha = 0.829
AF1 Your enterprise is financially stable and does not need financial
support
0.718 0.767
AF2 Your enterprise has enough collateral to receive credit from
commercial banks
0.647 0.789
AF3 Your enterprise is satisfied with the maximum amount of loan of
the banks
0.659 0.786
AF4 Access to finance is the major problem affecting the investment
of enterprise
0.636 0.792
AF5 When you need the capital, you can easily mobilize more capital
from the banks
0.474 0.835
Source: Cronbach’s Alpha test results from survey data, 2017

4.2 Exploratory Factor Analysis (EFA)
When performing EFA, the test values are guaranteed: KMO: 0.5< KMO = 0.899 < 1.0; Bartlett’s test
for the correlation of observed variables (Sig. = 0.000 < 0.05) indicates that the variables are closely related. The
total variance of 70.288% (> 50%) is satisfactory and reveals that four groups of factors explain 70.228%
variability of data. This means that the results of the EFA analysis are perfectly consistent. The results of
factorial rotation matrix analysis in Table 5 show that there are four groups of factors informed, the number of
observed variables is only 18 variables, decreased one observed variable BP1.
Table 5: The results of factorial rotation matrix analysis
Item
code
Factor
F_BP F_FMR F_ME F_FL
ME1 0.800
ME2 0.771
ME3 0.838
ME4 0.805
FL1 0.831
FL2 0.749
FL3 0.821
FL4 0.792
BP2 0.738
BP3 0.862
BP4 0.814
BP5 0.822
BP6 0.815
FMR1 0.882
FMR2 0.794
FMR3 0.754
FMR4 0.745
FMR5 0.576
Source: Results of factorial rotation matrix analysis from survey data, 2017
4.3 Linear regression analysis and ANOVA analysis
4.3.1 Linear regression analysis
The results of linear regression analysis in Table 6 show that the significant level of the model is very
small (Sig = 0.000) compared to the significant level of 5%; therefore, the regression model is established
consistently. The adjusted R2
value = 0.429 revealing that 42.9% of the variation of access to finance is
explained by the factors included in the model. Durbin – Watson Coefficient and VIF Coefficient of the model
show that there is no autocorrelation and the phenomenon of multi-collinearity is negligible. Based on the
statistical significance of each factor and the estimated results of the impact factor of each factor indicate that
four variables are statistically significant (Sig < 5%) and are strongly correlated with access to finance of SMEs.
The managerial experience factor has the strongest impact on access to finance of SMEs in Binh Duong
Province (Beta = 0.401), the second strongest impact factor is financial management regulation (Beta = 0.323),
followed by the business plan factor (Beta = 0.304) and financial literacy (Beta = 0.279).

Table 6: Results of linear regression analysis
Category Item
Code
Coefficient B Coefficient
Beta
Coefficient
Sig.
VIF
Constant 2.917 0.000
Managerial experience F_ME 0.286 0.401 0.000 1.000
Financial literacy F_FL 0.199 0.279 0.000 1.000
Business plan F_BP 0.217 0.304 0.000 1.000
Financial management
regulations
F_FMR 0.231 0.323 0.000 1.000
Adjusted coefficient R2
0.429
Coefficient Durbin-Watson 1.978
Level of significant (Sig.F) 0.000
Source: results of linear regression analysis from survey data, 2017
4.3.2.One-way ANOVA analysis of differences between groups
4.3.2.1 Variance test and average test
The summary of variance test and average test in Table 7 show that with a statistically significant level
of 5%, groups of different education and groups of different business size have the impact on access to finance
of SMEs (Sig = 0.000). However, groups of different type of business and groups of different age of business do
not affect access to finance (average test coefficient of type of business is sig = 0.191 >0.05, the average test
coefficient of age of business is sig = 0.200 > 0.05).
Table 7: Summary of variance test and average test
Variable Leneve variance test (sig) Groups average test (sig)
education 0.000 0.000
Type of business 0.293 0.191
Size of business 0.002 0.000
Age of business 0.961 0.200
Source: Results of ANOVA analysis from survey data, 2017
4.3.2.2 In-depth analysis of ANOVA
The results of in-depth ANOVA analysis of the owner’s education factor in Table 8 show that with a
statistically significant level of 5%, there are two education groups affecting to access to finance differently.
Group of university will have better access to finance than group of secondary and college (sig = 0.003), and
group of postgraduate accesses finance more easily than group of secondary and college (sig = 0.012).
Table 8: In-depth ANOVA analysis for the education factor
(I) education Average
difference (I-J)
Standard
deviation
Sig. Confidence interval 95%
Lower bound Upper bound
Secondary,
College
University -0.26269 0.07808 0.003 -0.4504 -0.0749
Postgraduate -0.73759 0.22295 0.012 -1.3280 -0.1471
University Secondary, College 0.26269 0.07808 0,003 0.0749 0.4504
Postgraduate -0.47490 0.21634 0.127 -1.0558 0.1060
Postgraduate Secondary, College 0.73759 0.22295 0.012 0.1471 1.3280
University 0.47490 0.21634 0.127 -0.1060 1.0558
Source: Results of in-depth ANOVA analysis from survey data, 2017
The results of in-depth ANOVA analysis of the size of business factor in Table 9 show that with a
statistically significant level of 5%, there are two size groups affecting to access to finance differently. Group of
enterprises with the capital from 20 billion to 100 billion VND has better access to finance than the one with the
capital under 1 billion VND (sig = 0.000) and group of enterprises with the capital from 20 billion to 100 billion
VND also accesses finance more easily than the one with the capital from 1 billion to 20 billion VND (sig =
0.000).

Table 9: In-depth ANOVA analysis for size of business
(I) Size of business Average
difference (I-J)
Standard
deviation
Sig. Confidence interval 95%
Lower bound Upper bound
Under 1
billion VND
From1billion to 20
billion VND
-0.09966 0.12456 0.811 -0.4049 0.2055
From 20 billion to
100 billion VND
-0.67673 0.15112 0.000 -1.0438 -0.3097
From1billio
n to 20
billion VND
Under 1 billion VND 0.09966 0.12456 0.811 -0.2055 0.4049
From 20 billion to
100 billion VND
-0.57707 0.10103 0.000 -0.8247 -0.3294
From 20
billion to
100 billion
VND
Under 1 billion VND 0.67673 0.15112 0.000 0.3097 1.0438
From1billion to 20
billion VND
0.57707 0.10103 0.000 0.3294 0.8247
Source: Results of in-depth ANOVA analysis from survey data, 2017
V. CONCLUSION AND RECOMMENDATION
The results of the regression analysis show that the factors including managerial experience, financial
literacy of the owner, business plan and financial management regulations directlyhave a significant impact on
access to finance of SMEs. At the same time, the results of ANOVA analysis for the characteristics of
enterprises and enterprises owners also show that the SMEs whose owner has higher education and SMEs with
larger size have better access to finance. Different type of business and different group of business age do not
affect access to finance of SMEs in Bind Duong Province. In order to improve the ability to access finance,
SMEs need to ameliorate the factors affecting access to finance. The author recommends the following solutions
5.1. Solutions to improve SMEs’ access to finance
Improve the financial literacy of business owners
The business owners need to actively improve their financial literacy through the Internet, books or
participating in training programs on knowledgeof financial service and financial development of the companies
to apply this knowledge to better financial management. The business owners should focus on improving
financial literacy points as follows:
-The improvement on financial analysis ability will help business owners forecast the financial
situations. Financial analysis skills that should be focused on are analysis of liquidity ratios, assets management
ratios, debt management ratios, and profitability ratios.
-The improvement on the ability to calculate the cost of loans will help business owners identify
appropriate funding sources, ensuring cost savings. Business owners should understand the interest rates, and
cash flow valuation methods to determine the cost of interest.
- The improvement on the business planning will help businesses set up more appropriate budgets and
control the financial situations. The skills that are needed in business planning are analyzing ability, cash flow
forecasting, capital, revenue, expense and profit in one period.
- The improvement on the ability to make financial reports will help business owners more closely
control the situation of assets, capital, revenue and expense, cash flow in business. Therefore, business owners
should understand the meanings of the indicators in the financial statements.
Improve the managerial ability of business owners
The business owners that have a good sense of management skills will have better managerial
performance in their businesses, including financial management. The management skills that need to improve
are: financial management skill, marketing skill, business plan skill, production management skill, human
resources management skill.
- The training on financial management skills such as financial analysis and setting up accounting
information system, working capital management, investment management and capital mobilization will assist
SMEs’ owners in making better financial decisions.
- The training on business planning skill involves steps and content of business planning, ensuring that
the business plans are feasible.
- The training on production management skill such as production planning, production process
management ensures the most efficient production.
- The training on marketing skill such as market research and product development, product marketing
strategies ensures that the products are sold as planned with the lowest costs.

- The training on human resources management skill involves the establishment of organizational
structure and recruitment activities of enterprises; an organizational structure needs to be streamlined but still
control the operation of businesses and make the full use of the capacity of employees.
Improve the quality of the business plan
In today’s rapidly changing environment, SMEs are vulnerable if the SMEs do not have a specific
business plan to respond quickly to the changing market. Therefore, SMEs should note the following points
when making business plan: planning must be based on the position of business, stemming from personal goals;
analyzing the challenges and opportunities of environment, the strengths and weakness in business; businesses
will set goals and business strategies for their enterprises; next is to identify the specific products and services,
human and financial resources for their enterprises; the final stage is the construction of short-term and long-
term budgets. This is the translation of the business plans and strategies into detailed estimations of profits,
expenses, assets investment and cash requirements. Enterprises deal with how to create budgets and use them to
monitor and control their operations. This whole process, include the inspection of business position, is
demonstrated in Figure 2. At every stage of the planning process, it is entirely possible that business may have
to change its business or strategic goals because some aspects of the plan can prove to be unworkable. They are
displayed as feedback loops
Figure 2: Business planning process
Establish effective financial management regulations
In order to develop effective financial management regulations, SMEs should pay attention to the
following points: financial management regulations must be based on the State regulations such as business law,
accounting standards, tax laws related to enterprises, to ensure the financial management regulations strictly
according to the State regulations; these regulations should fully reflect the contents of financial management
such as regulations on cash management, inventory management, receivable management, fixed assets
management, capital mobilization and the use of capital, accounting information system; before introducing
these regulations into enterprises, it is recommended that experts in enterprise financial management should be
consulted to help them in line with the reality of enterprises; the financial management regulations should also
be disclosed to the internal and external stakeholders.
Improve the credit conditions of commercial banks
The majority of SMEs in Binh Duong Province lack financial records and collaterals required by
commercial banks, thus affecting their access to finance. Therefore, the improvement in credit conditions will
help those businesses access the finance more easily:
- Collaterals improvement: SMEs should complete the legal documents on ownership and determine
the value of the assets accordance with the real situations in order to secure the collateral.

- Financial records improvement: SMEs should improve accounting records and financial statement
followed Vietnamese accounting standards. They should also perform periodic audits to ensure financial
transparency.
5.2. Recommendations and suggested policies for relevant organizations
The Government and Binh Duong People’s Committee should also have specific policies and programs
to support SMEs in Binh Duong Province to access timely funding sources with reasonable interest expenses, as
well as regularly support training on management, business plan, financial literacy for the owners of SMEs,
contributing to the financial management improvement of SMEs in Binh Duong Province. The commercial
banks in Binh Duong Province should provide adjusted loans that are flexible and easy to understand in order to
help SMEs have timely capital for their business operations at reasonable costs. The Financial Services and
Development companies and SME Associations should strengthen SME supports in consulting and training on
financial literacy and management skills and access the capital sources with reasonable costs.
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*Corrosponding Author: 1
Pham Cong Do
1
Thu Dau Mot University

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