BUSF_A01.qxd

Relevant websites

4 Economic value:

• Discounts future estimated cash flows to the shareholders.


• Theoretically the most sound approach.


• Difficult to estimate cash flows.


• Difficult to find the suitable discount rate.

Working capital

lInventories likely to be proportionately higher than for a large business because:

llimited access to economies of scale;

lsuppliers may require fairly large minimum order sizes;

llimited opportunity to use just-in-time inventories control.

lTrade receivables likely to be relatively high because:

levidence shows this to be true;

lsmall businesses may lack sufficient market strength to push for prompt

payment.

lTrade payables likely to be relatively low because:

lsmall businesses may lack sufficient market strength to be able to resist

pressure from suppliers to pay promptly.

Arnold (2005) provides good coverage of small businesses generally. The further reading sug-

gested at the end of previous chapters generally provides coverage of particular topics in the

context of both large and small businesses. The two Bank of England reports (2001 and 2003)

and the Department for Business Enterprise and Regulatory Reform survey, cited in the chap-

ter, provide interesting insights into the features of small businesses, particularly in the context

of financing.

Further

reading

The Bank of England site provides access to the Bank’s statistics and to various publications,

including regular reports on the financing of small businesses, which can be downloaded.

http://www.bankofengland.co.uk

The British Venture Capital Association’s website provides information about venture capital.

http://www.bvca.co.uk

The National Business Angels Network site is:

http://www.bestmatch.co.uk

Relevant
websites