#4721. Growing SMEs and internal financing: the role of business practices

August 2026publication date
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Journal’s subject area:
Business, Management and Accounting (miscellaneous);
Strategy and Management;
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Abstract:
The purpose of this paper is to identify business practices that may promote internal financing of growing SMEs. The authors expand the literature on entrepreneurial finance that reduces business practices to either financial management or bootstrapping, by exploring all management practices that may have an impact on liquidities. The empirical study involved a sample of 235 growing Canadian SMEs. The sample was extracted from a private database using a questionnaire that covered a wide range of business practices. SMEs which make use of efficiency-promoting technology, carry out preventive maintenance and control their costs and turnover during their growth are more inclined to use less external financing. This is the first study that associates business practices, beyond bootstrapping, with financing and which answers a critical question posed by SME executives on how to preserve their financial and decision-making autonomy through growth stages. In addition, the desire to retain control of the company does not compel the SME manager to limit the size of the company.
Keywords:
Bootstrap financing; Business practices; Growth; Internal financing; Self-financing; SME

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