If you want to succeed in business, you need to know about financial management. No matter how skilled you are at creating a product, providing a service, or marketing your wares, the money you earn will slip between your fingers if you don't know how to efficiently collect it, keep track of it, save it, or spend or invest it wisely.
Poor financial management is one of the leading reasons that businesses fail. In many cases, failure could have been avoided if the owners had applied sound financial principles to all their dealings and decisions. Financial management is not something that you can leave to your banker, financial planner, or accountant - you need to understand the basic principles yourself and use them on a daily basis, even if you plan to out-source the more complicated work to professionals.
In this module we'll outline the basic concepts of financial management as they apply to small business owners, starting with the simplest, most everyday bookkeeping tasks, and moving on to more sophisticated concepts:
- Your basic bookkeeping explains how to record daily transactions, work with your accountant, and, for the do-it-yourselfers, how to close the books and draw up financial statements.
- Credit and collections discusses the pros and cons of accepting credit cards or offering trade credit, and shows you how you can more quickly and effectively collect the money your customers owe you.
- Managing your cash flow describes the professional way to manage your cash flow to reduce the lag between cash outflows and inflows, and shows how to invest surplus cash.
- Major purchases and projects shows you how to evaluate larger investments in capital equipment or business facilities by using some of the same financial tools used by accountants and other financial professionals.
- Analyzing your current financial position delves into some of the more sophisticated ways of examining your financial statements as well as other aspects of your business to identify trends, to spot problems before they become too large, and to compare your business to others in the same industry.
- Financing your business: Small businesses usually need more than just cash; they need "smart" money. Therefore, you need to identify your business' financing profile, understand the various financing sources that may be available to you, and analyze which options best fit with your company plans.
Business Services Center website information and tools, including downloadable templates and forms, are made available to you as self-help tools for your independent use, and are not intended to provide business advice. We cannot and do not guarantee their applicability or accuracy in regard to your individual circumstances. We encourage you to seek personalized advice from qualified professionals regarding all your business consulting needs.