Practical Financial Management To Start A Business

By | August 15, 2014

financial for businessThe financial system is one of the most important design today. An effort will be well when the system of financial and accounting smooth, precise and arranged neatly.

Likewise, when we are going to start a business or a business, planning a good financial system will give a huge impact when business is already running and over the business or businesses we will look also whether the financial system that we were already well prepared or yet. More The obvious again, whether or not our financial system will look good or the cash flow of the business in which we live

Financial management is concerned with the overall activity of the effort to raise funds and use those funds. If we look from the functionality, financial management is a way how to get the funds and use the funds effectively and efficiently in order to achieve the intended purpose. Financial management functions can be divided into two, namely to set use funds (investment) and to arrange to meet the needs of funds (funding)

The function of regulating the use of funds, including the planning and control in the use of property, whether smooth or fixed assets. Minimize the use of funds will directly determine the size level benefits arising from the use of the funds or of the investment returns. As for meeting the needs of funding (funding), it is important to get the funds if required at a minimal cost and conditions – favorable terms and, of course, the results obtained from the funding must be used efficiently.

All funding has been obtained that in the future will determine the amount of capital the company to start a small business. Capital itself is divided into 2 Equity Capital Active and Passive.

1. Active Capital is activity use of funds or property to invest in various assets, either smooth or fixed assets. Active capital is divided into 2 active capital the lancer and capital remain active.

Current assets are capital assets are exhausted in a single turnover in the production process, and the turnover is in the short term (generally less than one year).

Capital assets are assets that are not durable consumables (such as the soil, on which it established a factory building) or gradually – gradually depleted (eg buildings – factory buildings, vehicles – vehicles, equipment – equipment, and others – others) participated in the production process.

2. While passive capital activity to obtain financial resources, both internal and external sources of funds of the company.

The Importance of Preparation Funding

Preparing funding should also be done carefully because it will affect the cash flow of our new business for the future. Some of the points that we need to consider are:

1. Determine the length of Break Event Point (BEP)

When we are just starting a business, of course, the financial account we will not show any benefit we generate because the amount of capital we should spend to start a business. Hence, we should target how long it’s our business reaches break-even point or a turnover.

2. Determine the sales target

Determining the sales target, especially the first 3 months, is useful so that we can predict and take into account the amount of operating expenses that we must bear in early business running until the sale to cover the cost of business operations even make a profit.

3. Determine the amount of funds for capital

Furthermore, when we have determined sales targets, we need to do is take into account the funds we have to cover the costs – operating costs to be borne by our business during business we have not reached the break-even point. The new business will certainly not directly generate sales and profits can cover the costs of doing business, therefore it is important we prepare fund our business operations during the sale we have not been able to close the existing cost.

Not infrequently, the businessman had just started his business failure, the following are some of the causes of business failure be related business with the financial arrangements are:

1. Spending too much capital.

As already mentioned at the beginning of the conversation, that the use of capital should be done as efficiently as possible. During the early stages of business development, we will likely be met with capital. Perform filter and prioritize and avoid costly mistakes that are not necessary. Poor financial planning, mismanagement of funds or spending budget is a common cause of business failure

2. Do not spend money wisely.

The first thing we need to know the main rules of business is money spawned money. Sometimes you spend money to make money in other words, we make investments to spend big to get funding or money so Kalil fold greater than the investment. For example, to get marketing advice (if we do not have a lot of experience in the world of marketing practitioners), we have to hire an expert or have a marketing strategy or a marketing seminar or workshop.

As an initial exercise for someone who wants to start to open a business and start a business is to start arranging finance personal finance. The key is how committed we discipline ourselves to make a personal financial statement and organize our personal finances. If this is established, it will make it easier for us when it will be applied in the business world