chapter  5
28 Pages

Seekers

ByScott Holmes, Michael T. Schaper

The Seekers were originally called Financially Constrained Growth Aspirers – which is a bit of a mouthful. The Seekers represent a broad range of industries, but tend towards retail trade, arts and recreational services, and other services. This chapter discusses the case-based contextual approach to understanding the Five Tribes of small firms that drive the economy. It discusses the concept of working capital management and how it relates to the profitability of businesses. Firms with strong cash flow tend to have higher investment in working capital (conservative strategy), while firms with cash flow problems are more likely to have a lower investment in working capital (aggressive strategy). Y. Belghitar and J. Khan analysed the effect of firm characteristics, including ownership structure and governance mechanisms on cash holdings for Small and Medium Enterprises in the United Kingdom. The firms with higher revenues often face higher capital risk and therefore the ability to interpret financial statements is relatively more important.