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Financial BusinessBusiness plan financial projections seem daunting because they are so uncertain. This very uncertainty, however, is what makes preparing them easy because you can’t possibly be right but...you can learn to be competent. Our culture revolves around statistics. In baseball there are statistics for the total number of bases a batter achieves versus his batting average. In cinema, the second week of a film's run is a more important factor in determining its long term success than the first. And in farming a high per acre crop yield is more important than the total bushels harvested. Most small business owners are quite eager to find avenues to help their enterprise grow into a thriving business. One key approach to help propel businesses forward is securing additional working capital, in order to get the business to the next level. Usually, this means that the entrepreneur needs to go to a lending institution to get a small business loan. Successful business people want their financial advisors to show them ways to keep their wealth. In essence, successful people want their financial advisors to provide them with financial, tax, succession and estate planning holistic solutions. They don't need their advisors to sell them products such as stocks, mutual funds and life insurance to achieve their financial success. The point is they are already successful. Business is the foundation of the world's economy. Unfortunately many businesses fail due to financial reasons. In entrepreneurial ventures the failure rate is extremely high - especially in the first couple of years. This article highlights some of the key factors that need to be addressed in order to minimize the probability of financial failure in business. There are views about the relevance of modern finance which is usually tailored or formulated with the view of large organisations in mind thereby ignoring small enterprises (McMahon et al, 1993). Thus, there is the view that small enterprise financial management has not been developed with the small enterprise in mind. Perry and Pendleton (1983) gave estimation that 50% of small businesses worldwide fail within 2 years of being opened and only 20% survive up to 10 years. A more popular longitudinal study of "small business enterprises' start and closures" by Williams (1987) report that on a study of 13,780 start-ups over a 13 year period from 1973 to 1985, there were over 59% failures and only 41% survivors. |
