Businesds Management

Topics: Qualitative research, Case study, Small business Pages: 57 (18960 words) Published: September 16, 2013
The Financial Management of the Small Enterprise
Professor David Deakins Professor of Enterprise Development, University of Paisley David Logan Lecturer, University of Glasgow and Dr Laura Steele Research Fellow, University of Strathclyde

Certified Accountants Educational Trust, London, 2001

The Council of The Association of Chartered Certified Accountants and the members of the Research Committee consider this study to be a worthwhile contribution to discussion but do not necessarily share the views expressed, which are those of the authors alone. No responsibility for loss occasioned to any person acting or refraining from acting as a result of any material in this publication can be accepted by the authors or publisher. Published by Certified Accountants Educational Trust for The Association of Chartered Certified Accountants, 29 Lincoln’s Inn Fields, London WC2A 3EE.

ACKNOWLEDGEMENTS

We are grateful for the following assistance in completing this study and research report: • • a research award from the Association of Chartered Certified Accountants participating small business owners, some of whom gave up considerable time in order to participate in the research project and • we are indebted to a colleague, Alana Morrison, who has provided comments on the draft report and suggested the application of the Balanced Scorecard model for financial management practices in small firms. Further work is being conducted into this approach.

© The Association of Chartered Certified Accountants, 2001 ISBN: 1 85908 337 4

Contents

PAGE 5 PAGE 9 PAGE 13

Executive summary 1. 2. Introduction Small businesses and financial management

PAGE 19 PAGE 25 PAGE 29 PAGE 51 PAGE 55

3. 4. 5. 6.

Methodology The case study businesses Discussion of findings Conclusions

References

Executive summary
Small and micro firms are important for future economic development and for the continued evolution of a modern, knowledge-based economy. An important key to the successful development and survival of small and micro firms is the role of financial management, which has been recognised by the Bank of England in its annual reports on the Finance of Small Firms (Bank of England, 1997; 1998; 1999a; and 1999b). Our report, however, diverge from most previous studies in taking a dynamic, process-based view of financial management. It is important to understand how changes in financial management practices in small firms occur. We argue that it is only through the qualitative methods adopted in the report that such understanding is possible. Policy interventions and the role of professionals can then be better informed: an issue on which we comment. The dynamics of financial management processes and decision making are influenced by many factors, including both internal management issues and external environmental issues. This summary is based upon the findings from a casebased study on financial management practice by owner-managers in small firms; our main conclusions reflect the importance of process issues. The study involved four main case studies with owner-managers in small firms. In addition, we have completed a programme of 30 face-to-face interviews with firms that were not investigated in full case study detail. In the case study firms, additional information was collected through financial accounts and several interviews in each business have been completed over the time period. The study was undertaken over a period of 12 months, although for the case study firms we have retrospective information that covers a longer time period. The research centre, Paisley Enterprise Research Centre (PERC), had maintained contact with three of the four case study firms over a number of years, enabling a rich source of data to be established. This methodology has allowed us to examine process and dynamic issues in financial management. It is arguable that previous research into financial management practices in small firms...

References: (continued)
Scottish Enterprise (1999a). The New Network Strategy, Glasgow, Scottish Enterprise. Scottish Enterprise (1999b). The Key Drivers Process: Final Report, Glasgow, Scottish Enterprise. Stake, R.E. (1995). The Art of Case Study Research, London, Sage Publications. Shaw, E. (1997). ‘The Real Networks of Small Firms’ in Deakins, D., Jennings, P and . Mason, C., (eds.) in print, Small Firms: Entrepreneurship in the Nineties, London, Paul Chapman Publishing. Storey, D.J. (1994). Understanding the Small Business Sector, London, Routledge. Turner, R. (1997). ‘Management accounting and SMEs: a question of style?’ in Management Accounting, July/August, pp. 24-25. Turner, B.A. (1994). ‘Patterns of crisis behaviour: a qualitative enquiry’ in Bryman and Burgess (eds) Analysing Qualitative Data, pp.195-215, London, Routledge. Yin, R.K. (1994). Case Study Research: Design and Methods (2nd ed), London, Sage Publications. Walker, E. W. and Petty, J.W. (1978). ‘Financial differences between large and small firms’ in Financial Management, Winter. Wilson, N. Watson, K.J., Singleton, C. and Summers, B. (1996). Credit Management, Late Payment and the SME Environment, Credit Management Research Group, University of Bradford Management Centre.
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The Financial Management of the Small Enterprise
ACCA/RR64/002 Price: Free of charge The Association of Chartered Certified Accountants 29 Lincoln’s Inn Fields London WC2A 3EE United Kingdom tel: +44 (0)20 7396 5979 fax: +44 (0)20 7396 5730 www.accaglobal.com
ACCA Research Report No. 64
The Financial Management of the Small Enterprise
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