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Finance and Credit
 

A performance-based (regulatory) approach to financial planning in small businesses

Vol. 21, Iss. 27, JULY 2015

PDF  Article PDF Version

Received: 26 February 2015

Accepted: 13 March 2015

Available online: 7 August 2015

Subject Heading: BUSINESS VALUE

JEL Classification: 

Pages: 59-67

Musienko S.O. Financial University under Government of Russian Federation, Moscow, Russian Federation
som090788@yandex.ru

Importance Building an effective system for financial planning becomes a key aspect of effective management in small businesses. It becomes especially relevant in the current macroeconomic uncertainty and instability.
     Objectives This research pursues demonstrating the efficiency of the performance-based approach to planning in small businesses as compared with the genetic approach. To meet the objective, the following tasks should be addressed: comparative description of the genetic and performance-based approaches to planning, indicating their strengths and weaknesses, comparison of results of these approaches and illustrating them with practical examples.
     Methods Using a comparative analysis, I find the key aspects of the effective application of the performance-based approach to planning.
     Results The research proves that the performance-based approach to financial planning is more preferable for small businesses than the genetic one. It is versatile for each phase of business life cycle and easier to use.
     Conclusions and Relevance Considering resource limitation and capabilities of small entities, the performance-based approach to financial planning is more effective, since it facilitates determining tasks to be performed in order to reach the strategic goal, at any phase of corporate development.

Keywords: performance-based planning, regulatory planning, financial planning, small business, small entities

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