Financial Planning for SMEs: A Literature Review

Introduction

Recently, the world economy has been going through one of the most serious crises in history, mainly due to the COVID-19 pandemic (Brodeur et al., 2020; Demirguc-Kunt et al., 2020). Furthermore, we have seen the war between Ukraine and Russia changing the global financial market. In this scenario, we observe an increase in inflation, a drastic drop in the production chain, an increase in interest rates, difficulty in obtaining financing, among other factors that contribute to unemployment (Ozili, 2002). All companies in the world were affected, but Small and Medium Enterprises (SMEs) are more susceptible (Yazdanfar & Öhman, 2020) to economic influences because they usually do not have subsidies that can finance their operational activity. In this context, greater attention is needed to the financial planning of these companies, due to their potential for generating employment and income.

According to Brealey et al. (2019) financial planning is necessary, as financing and investment decisions must interact with other areas of the company and should not be treated in isolation, helping managers and financial managers to act in advance in the face of uncertainties, avoiding negative surprises in the company's cash flow and balance sheet. In this sense, we believe that financial planning in the current world scenario is necessary not only for large corporations, but is crucial for SMEs, since we understand that they are more susceptible to economic changes and market fluctuations than other companies. There is also some evidence that entrepreneurs prefer to use short-term resources which indicates that they generally do not use some tools for long-term financing (Landier & Thesmar, 2009). Therefore, financial planning is necessary to control these companies and allow the use of resources so that we can help managers to think and adapt their businesses to market uncertainties (McMahon & Holmes, 1991).

The authors currently have an estimated 212.98 million SMEs worldwide in 2020, according to Clark (2021). According to World Bank (2022), SMEs are the most important contributors to job creation and the development of economies around the world. They represented 90% of the world's companies and more than 50% of employees, being only formally registered companies.

In this way, the investigation on the subject is of paramount importance, since the number of articles in the literature is scarce, therefore, these data show how important the sector is for the economy and research in finance on SMEs and it appears that there is no reached the research potential they could provide, therefore, to investigate the importance of financial planning for the development of SMEs and the lack of research in this area, we used the process called ProKnow-C (Knowledge Development Process Constructivist) (ENSSLIN et al., 2012a), which begins with the researcher's interest on a given topic, as well as its boundaries and restrictions intrinsic to the academic context, in search of the construction of knowledge in the researcher, so that he can start a scientific research with foundation. In order to achieve the research objectives, the systematic literature review (SLR) approach was used, which has as a first step a comprehensive search on the topic of financial planning for SMEs in the Web of Science database in order to meet the research objectives. a) What is the main area of publication in Financial Planning for SMEs? b) Who are the most influential authors? c) What are the most influential journals in this field? d) Which are the most influential universities in this field?