This report uses a large sample of data from BDRC’s SME Finance Monitor, the definitive record of UK SMEs’ access to finance, to demonstrate the strong but complex link between the early development of the finance function and SME growth. It also uses insights from the international academic literature to consider the business needs that drive the formalisation and growth of the finance function, as well as the synergies that develop between business planning, management reporting, and the use of financially trained staff.
The core finding is that the development of the finance function is not the result of business growth, but one of its causes. The combination of formal business planning, regular management reporting and the use of financially trained staff is a prerequisite to a mode of rapid growth that does not jeopardise the survival and longevity of the business.
Although a significant minority of enterprises begin life with a rudimentary finance function and continue to build on this as they grow, the majority are forced to develop their finance functions on an ad hoc basis according to pressing business needs. At any given time, the bulk of the SME population is made up of very small enterprises – most of them with no members of staff other than the founder. This often gives the impression of extremely low financial capability among SMEs, but among those businesses where there is the intention to grow the reality is much more promising and fluid.
'via Blog this'
No comments:
Post a Comment