AN ANALYTICAL STUDY OF FINANCIAL DECISION-MAKING, STRATEGIC PLANNING, AND RISK MANAGEMENT IN SMALL AND MEDIUM ENTERPRISES

Small and Medium Enterprises (SMEs) form the backbone of most economies, particularly in developing nations like India. Despite their crucial contribution to employment generation, innovation, and regional development, SMEs often encounter complex challenges related to financial decision-making, long-term strategic planning, and risk exposure. This study seeks to explore and critically analyze the interlinkages between financial decision-making, strategic planning, and risk management practices within SMEs, with a focused empirical assessment in the Delhi-NCR region. The study aims to understand how SMEs approach investment decisions, manage financial constraints, and mitigate risks arising from market volatility, regulatory uncertainty, and operational inefficiencies. Through a combination of quantitative surveys and qualitative interviews with SME owners and managers, this research identifies patterns in capital structuring, working capital utilization, and long-term financial strategy formulation. It also evaluates the extent to which SMEs adopt formalized risk management systems or rely on intuitive, experience-based methods. Findings reveal that financial decision-making is often reactive rather than proactive, with limited strategic foresight due to resource constraints and lack of managerial expertise. Risk management, though recognized as critical, remains largely informal. Strategic planning is sporadic, usually triggered by crises or funding opportunities rather than embedded in routine operations. However, SMEs that integrate financial analytics and scenario planning into their strategies tend to exhibit higher resilience and growth consistency. This research fills a significant gap in understanding how integrated financial strategy and risk governance can support SME sustainability. It offers practical recommendations for SME stakeholders, policymakers, and financial institutions to foster a supportive ecosystem. The study underscores the urgent need for capacity building and policy interventions that enhance SMEs’ strategic financial capabilities and risk resilience.