Title: Financial planning and control in very small start-up companies: antecedents and effects on company performance

Authors: Steffen Mengel; Marc Wouters

Addresses: Institute of Technology Management, University of St. Gallen, Dufourstrasse 40a, 9000 St. Gallen, Switzerland ' Department of Economics and Management, Karlsruhe Institute of Technology, Kaiserstrasse 89, 76133 Karlsruhe, Germany

Abstract: This study motivates and tests hypotheses about the antecedents of the use of financial planning and control systems in very small and young start-up firms, and, in turn, the effect of this on firm performance. This setting is of particular interest since theory on financial planning and control in start-up firms is not fully specified when it comes to very small and young firms. Based on survey data, we found educational background to be an antecedent of the use of financial planning and control systems, and some support for work experience as an antecedent. Use of financial planning and control systems, in turn, was found to be an antecedent of company performance. Although theory on start-up firms suggests that sophisticated financial planning and control activities might not be beneficial for very small and young start-ups, we found empirical evidence that indicates the opposite.

Keywords: financial planning; financial control; start-ups; firm performance.

DOI: 10.1504/IJESB.2015.071824

International Journal of Entrepreneurship and Small Business, 2015 Vol.26 No.2, pp.191 - 216

Received: 08 Feb 2015
Accepted: 08 Feb 2015
Published online: 19 Sep 2015 *

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