Why is Financial Management Vital in Keeping a Business Alive?
March 19, 2020
It is a widely known fact that regardless of how passionate or committed you are to your business, it will all be in vain without a proper supply of capital and tactfully managed finances. After all, when the business is showing signs of growth, you need the right plans to make sure that this growth is sustained. And, similarly, when the sales are slow, you will still need to have a plan in place that keeps you away from landing in debt and helps you pay off your employees, vendors, and utility bills.
So, in more ways than one, financial management is the life-breath of your business. It is the one thing that can make your business sink or swim in this vastly competitive world. In this article today, we will get into the importance of financial management for businesses and will look at the ways in which it helps keep a business alive. So, without any further delays, let’s get right into our topic of discussion for today.
Importance of financial management in the early stages of the business
It would be wrong for anyone to assume that financial planning can wait until a business is properly up and running. When you launch a new venture, most of the financial decisions and strategizing has to take place before your doors are even formally open. Think of decisions like, from where your initial capital will come from, or the amount of revenue you will have to generate to keep functioning. All of these are crucial parts of your financial management schemes. It helps you assess your prospects and take stock of the potential risks.
When the business is up and running
One of the main reasons why you need proper financial management when your business has started running is to make sure that it keeps prospering the way you have envisioned. It also gives you a basis to run comparisons with your expected growth and current growth, along with helping you strategize in keeping with your competitor’s progress. Thus, it makes sure that things are in perspective instead of making you drown in data and numbers.
When it comes to long-term planning
It is natural for businesses to go through a phase when sales are stagnant, the growth is sluggish, and it feels like that rise is just not going to come. But, when you have a long-term financial management strategy in mind, it helps in keeping you focused on the end game. Besides, proper management of your business’ finances will also ensure that those lean and disheartening phases in the business are fewer than ever before.
For the decisions related to investment
Perhaps one of the biggest benefits of financial management lies in the fact that it helps a business to keep drawing the necessary investments. For instance, the venture capital investors will not invest in your business if they do not see that there is a proper plan for them to get good returns. With a lack of financial management, there is dwindling profits or frequent lean phases in the business. This will also dissuade banks and other financial organizations from offering loans to you.
A business needs able and expert managers and leaders to ensure that all of these benefits of proper financial management are aptly drawn by it. This is exactly the aim of IIM Kozhikode behind introducing its Executive Post Graduate Certificate in Financial Management (EPGCFM) Programme, which has been designed to provide the aspiring minds with specialized learning in the niche of finance to enable their growth into able financial managers. We, at Times TSW, stand as the exclusive delivery partners for the EPGCFM programme of IIM Kozhikode in India and deliver the programme through an interactive online portal. The sessions are conducted live online by the senior faculty from IIM Kozhikode and participants can choose to attend the sessions at any of the 68 centres of Times TSW across the country. Register for IIM Kozhikode’s Executive Post Graduate Certificate in Financial Management Programme at Times TSW today and get onto the path of fulfilling your dreams of a brighter career ahead.