Definitions and Business Financial Health Framework

Micro, Small and Medium Sized Enterprises (MSMEs) are an integral part of many of the economies around the world. These businesses stem job creation, drive innovation and contribute to GDP growth. Financial Resilience Institute recognizes this and the intense need to better understand and aid entrepreneurs in ensuring strong financial health and resilience for MSMEs globally.

The proprietary Business Financial Health and Resilience Framework provides a framework for analysis of the financial health and resilience of Small and Medium Sized Enterprises (MSMEs) and the relationship with the respective business owner’s personal financial health, financial resilience and financial wellness.

The framework focuses on business financial practices and behaviours across the spectrum of daily financial management, cashflow management, saving, planning, and investing (including succession planning), borrowing, debt management, and protection. It brings a holistic lens and set of indicators related to business financial health, financial resilience and business owner financial wellness. It brings a holistic lens on the business and personal financial health and resilience of a MSME business; the business owner, their family and employees as appropriate.

The framework was developed over ten years by Eloise Duncan, CEO and Founder, Financial Resilience Institute. It has been informed by quantitative Business Financial Health Studies and research from the US, Canada, India and other countries; several qualitative consultations with Business Banking experts and MSME bank customers in Canada [1,2]. In addition, the framework builds on the Personal Financial Well-Being Framework developed in 2016 [3].

For more data and insights around SME financial health and financial resilience, check out our Small Business Financial Health and Resilience Report.

Source: Financial Resilience Institute, Business Financial Health and Resilience Framework

[1] ‘Business Financial Health and Resilience Framework’ refers to a model developed by Seymour Management Consulting Inc. in 2021 and licensed by Financial Resilience Society (dba Financial Resilience Institute). This provides a framework for analysis of the financial health and resilience of Small and Medium Sized Enterprises (MSMEs) and the relationship with the respective business owner’s personal financial health, financial resilience, and financial wellness. The framework focuses on business financial practices and behaviours across the spectrum of daily financial management, cashflow management, saving, planning, and investing (including succession planning) borrowing, debt management, and protection.

[2] ‘Financial Well-Being Framework’ refers to a proprietary framework developed by Seymour Management Consulting Inc., used under license by Financial Resilience Society, with this outlined on page 107. The framework provides a holistic view of the complex construct of an individual’s financial well-being. It includes definitions, indicators, and connections between the inter-related constructs of financial health, financial resilience, financial wellness, and financial capability which together impact an individual’s financial well-being. The framework has a focus on individual consumer and financial behaviours that impact individuals’ financial well-being across the spectrum of daily financial management, saving, planning, and investing, debt and credit management and protection. The framework is published on the Institute’s website at: https://www.finresilienceinstitute.org/definitions-financial-well-being-framework/