Question

In: Finance

A literature review, topic:The correlation between financial management competencies and small business success .

A literature review, topic:The correlation between financial management competencies and small business success .

Solutions

Expert Solution

 

Financial management is deeply related to decision-making related to the size and composition of assets, the level and structure of financig, and dividend policy, focusing on two main factors such as profit maximization and wealth maximization. to achieve these objectives, one of the most used tools for truyly effective financial management of the sea is management control, wich guarantees to a high degree the achievement of the goals set by the creators, managers and executors of the financial plan.

Financial management skills are the foundation of any company, since good management depends on the success of small companies in facing the market and establishes a starting point for their survival. Around 50% of small companies do not have a good financial education from their leaders, according to a study carried out in Florida. This results in a high correlation between financial management skills and the success of small businesses. The more developed these competencies are, the less the failure of small companies.

this correlation is manifested with the good administration of the business, through a good management of the financial statements, market analysis, achievement of objectives according to the benefit of the short and long term of the business.

Good financial management ensures proper management of the costs and income of small bussines. it also serves for decision-making in the debt structure required by the business so as not to compromise it´s operational flows, which guarantee the survival of the business and most importantly ensure the increase in business profits.


 

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