Joy Olivia Miller

Archive for the ‘Financial Management’ Category

Case studies show that one of the primary reasons for small business failure is the lack of poor management tools and techniques. When it comes to the accounting and financial reporting, business owners are more successful when there is a set of procedures to follow. This article provides five steps to management accounting to ensure that you get good results from financial reports.

Step 1: Source Documents. A lot of business owners have a habit of making purchases and failing to keep their receipts. But an important part of accounting is maintaining source documents. They are a vital piece of the financial puzzle because they tell you what, where, when, why, and how money flows in and out of your company.

Step 2: Accounting Systems. The receipts that you have should be recorded for better management. Use an accounting system to help you accomplish this task. There are three types of accounting systems that you can use. Depending upon your preference and the level of complexity for reporting needs in your business you may select from a manual, spreadsheet, or an accounting software to fit your needs.

Step 3: Financial Reports. After entering the financial transactions for your business the next step is to create financial reports. The type of financial reports that owners use in business varies. At minimum you should produce a Balance Sheet, Income Statement, and Statement of Cash Flows each period.

Step 4: Management Review. Your financial reports will give you an account of the progress you are making in business. Each report provides different information to help you assess the financial decisions and how they impact overall performance. For example, the Balance Sheet can provide answers such as: How much cash is available?; How much debt is the company carrying?; and What is the net worth of the business? Likewise, the Income Statement and Statement of Cash Flows illustrate the details to address questions that involve business growth and sources and uses of cash.

Step 5: Course Adjustments. It is common for business owners to take action using your “gut instinct.” This is where you have a strong feeling for how well or poorly you have performed without having numbers to back up your assumptions. But when you take a look at the actual data it can be an eye-opening experience. Use the results from financial reports to leverage opportunities to improve and grow. Remember to establish measures and track progress over time to see how assumptions and decisions impact sales, expenses, and the bottom line.

To learn more about accounting and financial reporting in business I invite you to sign up for my free monthly newsletter at http://www.tbsusa.com.

As women, especially as married female entrepreneurs, we often struggle with making money because we believe that we can’t increase our income or manage our money very effectively. And if we’re currently carrying debt we tend to think that we’re doomed to be in debt for the rest of our lives, because we don’t feel competent about getting out of debt.

If you have been struggling with debt for a while, it’s likely you hold the belief that you are powerless to change your situation. As a result you feel negative about yourself. You start to feel incompetent. And then you begin to feel stuck, bitter and resentful. This has an impact in other areas of your life because you don’t feel motivated about building your business or hopeful about career options.

Money issues are often a reflection of self-esteem and self-worth.

“If you look closely, you will discover that you don’t necessarily get what you deserve in life but instead you get no more and no less than what you actually believe you deserve. Only to the degree that you appreciate your innate human worthiness will your subconscious mind open up to life’s bounty. Success involves talent, effort and creativity, but first of all it requires a willingness to receive.” Those words were written and shared by Dan Millman in Everyday Enlightenment.

An exercise that you can do is to imagine that you are walking up to the ocean. Pretend that the ocean represents everything that is available to you; prosperity, abundance and having more money. As you walk towards the ocean imagine that you are bringing a container with you to collect all the prosperity and abundance that is available to you. Now look down and notice the size of container you are carrying with you to receive this prosperity. Are you carrying a thimble or are you bringing with you a huge bucket? How large is your container?

Ram Das shared in one of his lectures, ” The rain may pour down from the heavens but if you only hold up a thimble, a thimble full is all you will receive.”

You can tell the size of the container that you are holding by your internal beliefs and actions. As you experience increased self-worth around money you will begin to charge more for your services and if you are carrying debt you will begin to take the actions steps you need to get out of debt. And finally you will no longer accept any excuse as being a reason why you can’t build wealth – because building wealth is your divine birthright.

Financial management is an often overlooked necessity for a growing business. In most cases, it is overlooked simply because the entrepreneur is unsure of how to use financial reports to help guide future decisions. For solo or micro businesses with no plans for growth, neglecting to develop financial projections is not the end of the world, but if you have any plans for growth, solid financial management is critical from startup on.

Know Where Your Money Comes From and Where It Is Going

Accounting records your business’s financial history — it only tells you what has happened with the venture’s money in the past. However, by analyzing financial reports that come from an accurate accounting system, the wide open roads of the future come into clearer focus. You can see where the bulk of your income comes from (specific services, product lines, sales staff) and you can alter your marketing accordingly. You can see where the money goes and make decisions about managing expenses.

Use Financial Ratios to Check Your Business’s Health

Financial ratios are fairly easy to calculate and can reveal all sorts of interesting information about the health of your business. And, you can easily rate how your business compares to similar companies by comparing your ratios to the standard industry ratios. These ratios are not absolute, but they can tell you where you are doing things right and where you might be missing the boat.

If any of your numbers are out of whack, a little research into how your competitors manage those expenses could increase your bottom line. Whether you need to tweak the procedures, alter operations, streamline competencies, or shake up the staff, evaluating the company’s financial ratios will help you know where to look in developing a strategic plan for improving the venture.

See Patterns in Your Business

Analyzing financial statements will also reveal patterns in your business. Sales trends come into focus, whether impacted by the season, changing consumer taste, or other factors, that allow you to better manage inventory, staff levels, and sales promotions. Variable expenses can be better monitored as well, and unusual or unauthorized expenditures will be identified in a timely manner. Thus, any occasions of theft, embezzlement or other questionable activity can be handled before the loss is too great.

Be Prepared for Change and Growth

Periods of change are the most difficult to manage. It is common for businesses to stumble, and even fail, during times of sudden or extreme growth. Often, the growth is unplanned and only occurs because some external factor triggers expansion. That factor can be anything from landing a large account to just finding a great deal on a second location space, but without planning for that growth, very few businesses survive intact. If you are planning to ever grow your business, that idea should be incorporated into financial planning from the start.

Financial planning is more than just reviewing the financial statements every so often. Rather, it is managing the money for the future by making justifiable projections based on past performance and using that knowledge to realistically fund the ideas in the company’s strategic plan. Most importantly, good financial planning is the difference between running your own business…and the business running you.

Introduction

How well a person manages their finances, depends on their ability to refrain from using it unnecessarily. The same theory applies to forex trading. Managing and controlling both the in-flow and out-flow of money from your margin and capital accounts is necessary for your success in forex trading.

Financial management

When starting out as a forex investor, investors have to open capital accounts. This does not mean that they have to keep withdrawing their money from capital accounts in order to invest. This is where brokerage firms come in. Brokers act as financiers to interested investors and other traders. They may cater to about ninety-nine percent of a person’s trading costs as long as they have marginal accounts with them. Getting these accounts with brokers is not automatic as potential investors have to meet their requirements. Different brokers have different requirements therefore, the best thing to do is to source for a brokerage firm that has the most suitable offers.

Many of the brokers prefer to be left in charge of the marginal accounts so that they can monitor their client’s progress. They do this for their own interests as they would not want to incur loses. They permit the clients to monitor the accounts as well though they expect them to make consultations before sealing or closing a trade. In financial management, it would be wise for investors to invest small amounts of leverage if the market is under volatile conditions. This will aid in minimizing costs and risks and maximize on making profits. This will also enable people to set aside more money for future investments in stable market conditions.

It is also important to constantly check your accounts and make the necessary adjustments in relation to your trading decisions. For instance, if the last three or four trades brought in profits, you could reduce the possibility of making future losses by making smaller and equal investments. Making one huge investment is very risky because if a person incurs loses, they may lose all their funds. Keeping book records of trading performances could help in making future decisions. You may present the books to professional traders who will further advise you on the best options to take in the next trades. Before committing your finances to forex trading, put aside all the important funds such as trust funds, child funds, retirement benefits and medical funds.

Using such funds is quite risky as once they are lost, they cannot be recovered. The best funds to use in forex trading are business savings that a person may have set aside for future investments. People who can afford may hire financial book keepers to manage their finances on their behalf.

Summary

Since forex trading is all about trading currencies, investors should be knowledgeable on how to maintain and control their finances. One may hire financial advisors or take short financial management courses in order to sharpen their management skills. Consulting with professional brokers or traders could aid in managing the finances adequately though one ought to be reasonable enough not to follow everything they are told to do with their finances.

Proper financial management is a great start of improving your life and reaching success. You need to know how to budget in order to sustain the financial needs for attaining your goals.

Not all of us know the proper way of managing money. In fact, many of us spend sometime looking for the best way of financial planning.

I have already read several blog posts about this topic, but I found no effective result. So, when one of my friends gave me an inspirational book for budgeting, I didn’t hesitate to read it. Luckily, I’m not disappointed with the contents in that book.

According to that book, there are only three simple steps for proper financial management. The three steps are:

(1) learning how to earn money,
(2) how to save it, and
(3) how to make it even bigger.

Earning money can only be done by looking for a job. It’s up to you to choose the field where you want to work. But remember, you should also consider your skills when looking for work.

Once people got a job, they usually find it hard to save their money earned. If you are among those who have difficulty in saving your money, you need to do something to end your problem. Look for the most effective way to save your money for the future.

Saving your money can be done in so many ways such as depositing it in the bank or making educational plans for your children. Another way of saving money is buying only the necessities to avoid overspending.

Making money even bigger can be a little hard for people who are not keen on investing their income to something where they can get additional earnings. If you want to increase the amount of the money in your pocket, spend it by putting up a small business or anything that can give you money in return.

When starting up a business, don’t forget to consider things such as its competitiveness in the market and your interest on the chosen field. For instance, if you love computers and being online everyday, you may consider setting up an internet shop.

Are you curious if where did I get these three simple steps in proper budgeting? Well, I actually got such effective advice the book titled the Richest man in Babylon, which as written by George S. Clason. If you want to know more about the right way of managing your money, don’t hesitate to read it, too.

When I first became an entrepreneur I had the idea that if I just focused on building a successful business – all the “money stuff” would fall in to place. I’d never considered myself great at math. I certainly had no desire to be anything remotely resembling an accountant. And besides – all the other stuff – building a website, getting a great logo, developing products, working on marketing strategies – were all SO much more exciting than financial management. Well, have you ever heard someone say that “money is not the most important thing in life – but it is certainly one of the most impactful things? The reality is that there are many, many ways that ignoring the financial side of your business will come back to haunt you. And one example is in the area of your business relationships.

As an entrepreneur, you are always working to develop strong business relationships – not just with clients – but also with suppliers, service providers and employees. It is important that you not overlook the negative effect that poor financial management can have on each of these relationships, creating a snowball negative effect on the success of your small business.

Your customers no doubt buy from you because they see that you have good products and/or services, offered at a great value. Your ability to continually meet the needs of your customers in terms of price and quality, depends upon the financial strength of your business. Financial organization is also critical in this area. Clients want to feel confident that they are working with a professional. They’ll form lasting judgments based on the efficiency and ease of your billing process, including invoicing, accepting payments and even returns.

Your suppliers are also of course essential to your business. They need to be paid on time per your agreements to that they can cover their needs. An entrepreneur failing to stay on top of the financials will quickly strain supplier relationships making it difficult, if not impossible to remain in business. The same can be said for any service providers you choose to work with. Strong financial organization and planning will help you to determine when you are ready and able to enlist a particular provider. Remember that service providers like accountants, marketing companies, publicists, designers, etc. will also be providing services for individuals who could be wonderful clients for your company. The better your relationship – the more likely they are to provide strong referrals.

Finally, remember that you would be nowhere without the staff and/or regular independent contractors who support you in your business. They rely on their monthly paychecks as much as you rely on them to keep your business running. It can be easy to overlook the business relationships you are developing with your staff, especially if your business is still struggling to be profitable. However, putting your employees first – giving them bonuses and other incentives whenever possible – has the ability to pay you back tenfold.