Accounting for Growth: Strategic Financial Management in the New Small Firm

Julia Smith

CRIEFF Discussion Papers from Centre for Research into Industry, Enterprise, Finance and the Firm

Abstract: The paper investigates financial management directed towards funding growth in the new small firm in Scotland. It makes appeal to two sources of first-hand data, gathered using fieldwork methods during the period 1993-97. The first evolved from interviews with 150 owner-managers of micro firms using an administered questionnaire (AQ); and the second, from a subset of 17 of these respondents, using a semi-structured interview schedule (SSI). The paper investigates: (1) aims and ambitions of owner-managers; (2) initial financial structure; (3) preferred alternatives for funding growth; (4) evolving financial structure; and (5) current position. It is shown that those owner-managers who start with a superior business idea and express that idea clearly and efficiently are also those who will attract more external funding, and subsequently perform better. In addition, they tend to have more sophisticated methods of managing finances and accounting information, using forecast figures rather than historical data, and working from sales and profit margins rather than merely cash flow.

Keywords: micro firm; accounting information; funding growth; strategic financial (search for similar items in EconPapers)
JEL-codes: D21 G21 L21 M1 M41 (search for similar items in EconPapers)
Date: 1997-10
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Persistent link: https://EconPapers.repec.org/RePEc:san:crieff:9716

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