Management Accounting Systems Support Start-up Business Growth
Management Accounting Systems Support Start-up Business Growth
The article “Management Accounting Systems Support Start-up Business Growth” generalize situations that appears to start-up business when they are facing their first organizational crisis. According to statistics, only relatively low percentage of start-ups reach success – most part does not perform even a year. But authors – Michael Lee and Spencer R. Cobia, believe that there is some tools, which will help start-ups to solve all their organizational problems, and these strategic tools are: Variance Analysis, Profit Planning, and Performance Measurement Systems (PMS).
For each of these three strategical tools authors of the article analyze some case studies in order to show high efficiency of these instruments. For example, there was a case of company named Globe (works on IT market), that faced the problem of profitability, and only after they started to use Variance Analysis of their profit streams, they have identified their core profitable customer group and narrowed their business to satisfy this group. Profit Planning and usage of Performance Measurement Systems were also applied for Globe case in order to underline their importance.
I totally agree with authors that all these three strategic tools can help any company (not only start-ups) to solve key performing problems that are faced by firms. Variance Analysis is great analysis tool for better understanding of how firm makes its profit and what are the most profitable streams. Profit Planning helps to identify sources for further development and prevent the situation of lack of money. Performance Measurement Systems are good way to keep in touch with all processes that are going in business performance of the company and keep the control system (that is one of the key factor of success) on the high level.
Lee, M., Cobia S.R. (2013). Management Accounting Systems Support Start-up Business Growth. Management Accounting Quarterly. Vol. 14. No. 3.
