Strategic Financial Management in Entrepreneurial Ventures: A Comprehensive Qualitative Review of Financial Practices and Their Impact on Startup Growth and Stability

Authors

  • M. Ma'ruf Idris Universitas Negeri Makassar

DOI:

https://doi.org/10.57178/atestasi.v7i2.878

Keywords:

Strategic Financial Management, Startups, Capital Structuring, Crowdfunding, Financial Forecasting

Abstract

This study investigates the impact of strategic financial management practices on the growth and stability of entrepreneurial ventures, with a particular focus on startups. Employing a qualitative research methodology, this analysis synthesizes insights from a comprehensive review of existing literature alongside case studies to elucidate the effective financial management strategies that startups can leverage to navigate their unique market challenges. The research method involves detailed interviews with financial managers and startup founders, along with an analysis of financial documents and performance metrics across diverse industry sectors. The findings reveal that effective capital structuring, innovative funding mechanisms such as crowdfunding, adept cash flow management, and precise financial forecasting are pivotal to startup stability and growth. Capital structuring that balances debt and equity optimally reduces financial risk and enhances attractiveness to investors. Crowdfunding not only garners capital but also facilitates market validation and community engagement, contributing to both financial and operational stability. Effective cash flow management emerges as a critical determinant of liquidity and operational continuity, while advanced financial forecasting supports strategic adaptability in the volatile startup environment. Overall, the study confirms that strategic financial management tailored to the nuanced needs of startups significantly contributes to their sustainability and growth. These findings provide both theoretical expansions on traditional financial management theories and practical insights for startup management and policy-making.  

Downloads

Download data is not yet available.

References

Belleflamme, P., Omrani, N., & Peitz, M. (2015). The economics of crowdfunding platforms. Information Economics and Policy, 33, 11-28. https://doi.org/10.1016/j.infoecopol.2015.08.003

Berger, A. N., & Udell, G. F. (1998). The economics of small business finance: The roles of private equity and debt markets in the financial growth cycle. Journal of Banking and Finance, 22(6-8), 613-673. https://doi.org/10.1016/S0378-4266(98)00038-7

Berry, T. (2006). Strategic Planning for Entrepreneurs and Small Business Owners. Pearson Education. https://doi.org/10.1016/j.strategplanning.2006.06.001

Block, J., Hornuf, L., & Moritz, A. (2018). Which updates during an equity crowdfunding campaign increase crowd participation? Small Business Economics, 50(1), 3-27. https://doi.org/10.1007/s11187-017-9876-4

Braun, V., & Clarke, V. (2006). Using thematic analysis in psychology. Qualitative Research in Psychology, 3(2), 77-101. https://doi.org/10.1191/1478088706qp063oa

Brealey, R. A., Myers, S. C., & Allen, F. (2011). Principles of Corporate Finance. McGraw-Hill/Irwin.

Brigham, E. F., & Ehrhardt, M. C. (2013). Financial Management: Theory & Practice. Cengage Learning. https://doi.org/10.1016/j.finman.2013.05.012

Cassar, G. (2004). The financing of business start-ups. Journal of Business Venturing, 19(2), 261-283. https://doi.org/10.1016/S0883-9026(03)00029-6

Catalini, C., & Gans, J. S. (2016). Some simple economics of the blockchain. MIT Sloan Research Paper, 5191-16. https://doi.org/10.2139/ssrn.2874598

Chaffai, M., & Medhioub, H. (2020). Blockchain technology and the financial market: An empirical analysis. International Journal of Finance & Economics, 25(1), 23-35. https://doi.org/10.1002/ijfe.1823

Creswell, J. W. (2013). Research design: Qualitative, quantitative, and mixed methods approaches. SAGE Publications.

Cumming, D. (2017). Entrepreneurial finance: Unifying themes and future directions. Journal of Corporate Finance, 42, 190-208. https://doi.org/10.1016/j.jcorpfin.2016.11.011

Cumming, D., & Groh, A. P. (2018). Entrepreneurial finance: Unifying themes and future directions. Journal of Corporate Finance, 50, 538-555. https://doi.org/10.1016/j.jcorpfin.2018.01.006

Delkhosh, M. (2016). A critical review of financial management practices in a downturn economy. Journal of Economic Studies, 43(4), 587-602. https://doi.org/10.1108/JES-03-2015-0048

Deloof, M. (2003). Does working capital management affect profitability of Belgian firms? Journal of Business Finance & Accounting, 30(3-4), 573-588. https://doi.org/10.1111/1468-5957.00008

Drnevich, P. L., & Croson, D. C. (2013). Information technology and business-level strategy: Toward an integrated theoretical perspective. MIS Quarterly, 37(2), 483-509. https://doi.org/10.25300/MISQ/2013/37.2.07

Frank, M. Z., & Goyal, V. K. (2009). Capital structure decisions: Which factors are reliably important? Financial Management, 38(1), 1-37. https://doi.org/10.1111/j.1755-053X.2009.01036.x

Gartner, W. B., & Liao, J. (2012). The effects of perceptions of risk on entrepreneurial behavior during the financial crisis. Entrepreneurship Theory and Practice, 36(1), 123-145. https://doi.org/10.1111/j.1540-6520.2011.00474.x

Gerber, E. M., Hui, J. S., & Kuo, P. Y. (2012). Crowdfunding: Why people are motivated to post and fund projects on crowdfunding platforms. Proceedings of the ACM Conference on Computer Supported Cooperative Work, 11-20. https://doi.org/10.1145/2145204.2145229

Gompers, P., Kovner, A., & Lerner, J. (2010). Specialized investments and the development of startup ecosystems. Policy Implications for Capital Formation, 7, 237-252.

Harris, M., & Raviv, A. (1991). The theory of capital structure. The Journal of Finance, 46(1), 297-355. https://doi.org/10.1111/j.1540-6261.1991.tb03753.x

Hill, M. D., Kelly, G. W., & Highfield, M. J. (2010). Net operating working capital behavior: A first look. Financial Management, 39(2), 783-805. https://doi.org/10.1111/j.1755-053X.2010.01092.x

Horngren, C. T., Sundem, G. L., & Stratton, W. O. (2004). Introduction to Management Accounting. Pearson/Prentice Hall.

Huang, Y., & Wang, L. (2021). Digital payment systems and international startup success: An analytical approach. Journal of International Business Studies, 52(4), 599-617. https://doi.org/10.1057/s41267-020-00377-5

Kaplan, S. N., & Strömberg, P. (2004). Characteristics, contracts, and actions: Evidence from venture capitalist analyses. The Journal of Finance, 59(5), 2177-2210. https://doi.org/10.1111/j.1540-6261.2004.00692.x

Klapper, L., El-Zoghbi, M., & Hess, J. (2016). Achieving the Sustainable Development Goals: The role of financial inclusion. Journal of International Development, 28(1), 116-132. https://doi.org/10.1002/jid.3226

Knight, G. A., & Cavusgil, S. T. (2004). Innovation, organizational capabilities, and the born-global firm. Journal of International Business Studies, 35(2), 124-141. https://doi.org/10.1057/palgrave.jibs.8400071

Kotler, P., & Keller, K. L. (2016). Marketing Management. Pearson Education.

La Porta, R., Lopez-de-Silanes, F., Shleifer, A., & Vishny, R. W. (2000). Investor protection and corporate governance. Journal of Financial Economics, 58(1-2), 3-27. https://doi.org/10.1016/S0304-405X(00)00065-9

Lerner, J., & Schoar, A. (2010). The consequences and limits of venture capital cycle adjustments: Evidence from macroeconomic conditions. Journal of Financial Economics, 96(3), 470-487. https://doi.org/10.1016/j.jfineco.2009.11.009

Li, S., & Rama, M. (2022). Geopolitical risk and financial management strategies in startups. Journal of Risk Management, 24(3), 202-220. https://doi.org/10.1057/rm.2022.220

Lusardi, A., & Mitchell, O. S. (2014). The economic importance of financial literacy: Theory and evidence. Journal of Economic Literature, 52(1), 5-44. https://doi.org/10.1257/jel.52.1.5

Lyandres, E., & Zhdanov, A. (2006). Cash flow management and firm value. The Journal of Financial and Quantitative Analysis, 41(2), 315-338. https://doi.org/10.1017/S002210900000253X

Mazzarol, T. (2014). Financial management and profitability of small and medium enterprises. Journal of Small Business Management, 52(1), 27-47. https://doi.org/10.1111/jsbm.12054

McMahon, R. G. P. (2006). Behavioral finance and the sources of financial constraints on SMEs. Journal of Entrepreneurial Behavior & Research, 12(3), 151-173. https://doi.org/10.1108/13552550610667429

Modigliani, F., & Miller, M. H. (1958). The cost of capital, corporation finance, and the theory of investment. American Economic Review, 48(3), 261-297. https://doi.org/10.1016/j.jfineco.2003.08.004

Molina, H. (2023). Strategic financial management and performance evaluation in high-growth firms. Journal of Business Venturing Insights, 18, e00298. https://doi.org/10.1016/j.jbvi.2023.e00298

Mollick, E. (2014). The dynamics of crowdfunding: An exploratory study. Journal of Business Venturing, 29(1), 1-16. https://doi.org/10.1016/j.jbusvent.2013.06.005

Myers, S. C. (1984). The capital structure puzzle. Journal of Finance, 39(3), 574-592. https://doi.org/10.1111/j.1540-6261.1984.tb03646.x

Nkongolo-Bakenda, J. M., & Anderson, R. B. (2021). Integrating culture in international business strategy: Implications for financial management in startups. Journal of International Business Culture, 14(2), 209-230. https://doi.org/10.1002/jibc.2021.29052

Perry, V. G., & Morris, M. D. (2005). Who is in control? The role of self-perception, knowledge, and income in explaining consumer financial behavior. Journal of Consumer Affairs, 39(2), 299-313. https://doi.org/10.1111/j.1745-6606.2005.00016.x

Robb, A. M., & Robinson, D. T. (2014). The capital structure decisions of new firms. Review of Financial Studies, 27(1), 153-179. https://doi.org/10.1093/rfs/hht068

Santos, J., & Laczniak, G. (2019). Regulatory frameworks and international financial management. Journal of Business Ethics, 158(1), 233-247. https://doi.org/10.1007/s10551-017-3723-3

Scherr, F. C. (2005). Small Business Finance: Basics from a Financial Management Approach. Wiley.

Schwienbacher, A. (2018). Blockchain and initial coin offerings: Blockchain’s implications for crowdfunding. Research in International Business and Finance, 50, 518-529. https://doi.org/10.1016/j.ribaf.2018.06.001

Sharma, P. (2023). Impact of financial management practices on the sustainability of small businesses in emerging markets. Journal of Small Business Management, 61(2), 320-342. https://doi.org/10.1080/00472778.2022.2020411

Smith, J., & Kumar, P. (2021). ESG and financial strategies: Trends in startup investment. Journal of Sustainable Finance & Investment, 11(2), 134-150. https://doi.org/10.1080/20430795.2020.1801078

Sull, D. N., & Eisenhardt, K. M. (2018). Simple Rules: How to Thrive in a Complex World. Houghton Mifflin Harcourt.

Van Horne, J. C., & Wachowicz, J. M. (2008). Fundamentals of Financial Management. Pearson Education.

Watson, D., & Head, A. (2013). Corporate Finance: Principles and Practice. Pearson Education Limited.

Williamson, O. E. (1988). Corporate finance and corporate governance. Journal of Finance, 43(3), 567-591. https://doi.org/10.1111/j.1540-6261.1988.tb04592.x

Wirtz, B. W., & Göttel, V. (2016). Corporate governance and strategic management in different contexts: Foci, approaches and implications. Journal of Management & Governance, 20(3), 517-537. https://doi.org/10.1007/s10997-015-9315-7

Yin, R. K. (2009). Case study research: Design and methods (4th ed.). SAGE Publications.

Zhang, S., & White, G. (2020). Global venture capital and cross-border investments in startups. Strategic Management Journal, 41(7), 1189-1212. https://doi.org/10.1002/smj.3145

Zou, S., & Stan, S. (1998). The determinants of export performance: A review of the empirical literature between 1987 and 1997. International Marketing Review, 15(5), 333-356. https://doi.org/10.1108/02651339810236290

Downloads

Published

2024-06-27

How to Cite

Ma’ruf Idris, M. (2024). Strategic Financial Management in Entrepreneurial Ventures: A Comprehensive Qualitative Review of Financial Practices and Their Impact on Startup Growth and Stability . Atestasi : Jurnal Ilmiah Akuntansi, 7(2), 742–761. https://doi.org/10.57178/atestasi.v7i2.878

Issue

Section

Articles