Question

According to Small Business Administration research, only half of new businesses survive for the first five years and only one-third of new businesses are able to survive for 10 years. According to Kamo (2016), "Sometimes people start businesses with a dream of making money but don’t have the skill or interest to manage cash flow, taxes, expenses, and other financial issues. Poor accounting practice puts a business on a path straight to failure" (para. 14). For this week’s discussion, search the internet to find an article discussing the importance of fiscal planning in a small business. Include the type of software recommended (if mentioned), competencies leaders should have in the area of finances and any other recommendations. Does the article support the positions by the authors of our textbook? Support your recommendations with course concepts and other outside sources.

Answer 1

Importance of fiscal planning in small businesses:

1. Effective fund utilization: with the help of a proper physical we can utilize our funds in a very effective manner. We can decide in advance where to deploy our funds in the future, and this will help us in avoiding any kind of risk of a shortage of funds for any required expense.

2. Formulation of marketing strategy: food help of proper fiscal planning, the business can formulate the budget of marketing strategy and can decide how to properly utilize the funds available for marketing.

3. Prioritization: with the help of proper fiscal planning, the business can properly prioritize the deployment of funds the activities which are at the priority of which are more important.

4. It will be helpful in the long run to decide the growth strategies and competitive strategies for the business.

Recommendations:

1. If required, small businesses should take the help of financial advisors for proper management of its financial assets and liabilities and further planning of insurance and other activities.

2. The business should make proper plans for tax assessment and should also plan about its retirement.

3. There is a need to focus on risk management of the business also.

It supports the positions by authors of the textbook.

References:

Article name: the importance of a financial plan for small businesses.

Article by: Brian Hill.