Module 1: Financial Management
In the day-to-day of running a business, a lot of money changes hands. Knowing where it is at any point in time is essential to your success. Nothing is worse than finding out you’re a bit short when payday rolls around or that a delivery doesn’t show up because your check bounced.
According to the Small Business Administration, the three biggest reasons a small business fails are:
- Not collecting all the money that is due.
- Managing inventory poorly.
- Managing a business based on what is in the bank vs. what the financial reports show.
The three most important keys to success are:
- Constantly collecting data, doing research and seeking out mentors.
- Understanding that your job as an owner is to create, manage and tweak the business systems.
- Having as much fun studying, learning and practicing business skills as you have running your business.
This module will give you a fundamental understanding of financial tools and how to use them to manage your business profitably and support future growth and expansion.
After completing his module, you should be able to:
- Understand the concept of financial management and why it’s essential to your business and you as the owner.
- Identify financial management practices, rules, and tools commonly used by small businesses.
- Understand how financial management best practices, rules and tools work together to secure financing to expand your business, purchase new equipment or machinery and increase working capital.
What do you know about financial management?
Before we take a deep dive, let’s take a moment to see where you are in your understanding of financial management practices. There’s no wrong or right here. This is so you can understand where you’re at and where you may need to focus on to build additional skills.
Read each statement below and select the number that corresponds with your level of confidence, level 1 (least) to 4 (most).
|1. I can explain the concept of financial management and why it is important to a small business.||1||2||3||4|
|2. I can identify financial management practices, rules, and tools commonly available to small businesses.||1||2||3||4|
|3. I can explain how these financial management practices, rules and tools work.||1||2||3||4|
|4. I can describe some of the features and benefits of three financial statements: balance sheet, cash flow statement and profit and loss statement.||1||2||3||4|
|5. I can explain the benefits of an “off-the-shelf” online accounting site or software.||1||2||3||4|
|6. I can explain the financial management basics for a small business.||1||2||3||4|
|7. I can explain the basics of start-up financing.||1||2||3||4|
|8. I can explain the basics of financing for a growing business.||1||2||3||4|
|9. I can explain the basics of financing working capital.||1||2||3||4|
|10. I can explain what a lender needs for me to apply for and secure a loan.||1||2||3||4|