Finance Reports

One of the major challenges facing entrepreneurs and business leaders is finding the right business partners. Great care should be exercised when selecting associates because the right choice can bridge gaps and assist in the execution of your business plan. The wrong choice can harm the reputation and earnings of your company. One should consider the following
when forming strategic alliances:

Find Believers in Your Mission

No one will champion your cause like a true believer in your vision, products, and services. Align yourself with those who comprehend the magnitude of what you are doing and will offer wholehearted support to your endeavors. Those who align themselves with you solely for monetary gain will often carry a short-term perspective that will conflict with your long-term business strategy.

Active Partner vs. Passive Partner

Another consideration is: Are you looking for an active or passive interest holder in your business? Do you seek someone who will be involved in the day-to-day management of the company? Many entrepreneurs opt for passive partners to avoid having them encroach on the management of the business. If you elect active partners, it is important that they share
the same vision, objectives, and ethics as your associates.

Smart Money vs. Silent Money

When pursuing financial partnerships, you have several options. You can choose investors that will solely provide financing, or you can partner with funding sources that will also offer guidance and help in strategic planning. Silent mon

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A great business plan can only get your business so far, but having the business capital to go along with that business plan can bring your business to new heights. It can also go the other way as a great plan is the first step to obtaining the capital you are seeking for your business.

Failing to plan your business properly can put your business in with the 90% of businesses that fail. Developing a business plan is hands down the most important step any business can take if they want realize true success. The business plan will be used by potential lenders or investors to determine where your business is going and how you are planning on getting there. A well written business plan will assist you greatly when you are seeking financing. Both lenders and investors look at your business plan differently. The lender is mostly concerned with whether you can repay the loan, and the investor wants to know how far you can take the business to maximize their potential earnings on the investment.

The first, and probably most important, part of your business plan will be the Executive Summary. This is where you grab the attention of the lender by providing an overview of your product or service, the market, your niche, the management, the mission, company structure, funding amount requested, use of funds, the proposed terms, and collateral offered. The lender or investor will not look at your business plan further if you don’t grab their attention with the Executive Summary.

The next item you will need to include will be a narrative, which is also known as an “elevator pitch.” A narrative simply defines what your company does in 20 seconds or less. Include the history of your business and your idea next. The reader needs to know a little bit about the history of this idea before they pour their money into your business. Try and answer the 5 W’s here; who, what, when, where, and why and it should assist you greatly when completing the history section.

A one sentence mission statement will follow. This is where you talk about what your business is about in one sentence. It’s important to not go quickly through this mission statement, as it gives your business a unique identity, so you need to make sure you do a great job with it. The stage is the next section of your business plan. This is where you discuss where you are at in the process of obtaining business funding.

The market niche section gives you the opportunity to show which niche your business is exploiting. You will want to disclose information on what sets you apart from the competition. This part will need to be very detailed to help the lenders and investors learn as much as possible about your business. Next to follow in your business plan will be a market research report. In this section you will do research to back up your claim that there is a need for your product or service. The financial overview is next. In this section you will include information including what your gross sales, net income, net worth, etc. should be in years one, two and three. This is just an overview and later in the business plan you will provide more accurate projections.

This will give you plenty of information to get you started on putting together a business funding request. In my next article I will cover some of the other aspects of your business plan. For a full version of an excellent business funding guide do a search on Google, Yahoo, or MSN for “Business Funding Workbook”.

Corey Pierce is the CEO of BusinessFinance.com a business capital search engine with the funding criteria of 4,000+ sources for business capital. Visit www.businessfinance.com. to search the funding directory for free. Pierce is also the creator of the Business Finance Coach found at www.businessfinancecoach.com.

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The job of a finance manager is a huge balancing act that requires a vast pool of knowledge. Knowing about stocks, dividends, bonds and maturity levels is the just the beginning of the job requirements. A company and organization wants to make sure that anyone who holds shares in the company will be able to profit considerably from the success of the company. The financial manager is in charge of making all this happen.

Financial managers oversee the preparation of financial reports,
direct investment activities, and implement cash management
strategies. Their duties vary with their specific titles, which
include controller, treasurer, credit manager, and cash manager.

The role of the financial manager, particularly in business, is
changing in response to technological advances that have significantly
reduced the amount of time it takes to produce financial reports.
Financial managers now perform more data analysis and use it to offer
senior managers ideas on how to maximize profits. They often work on
teams, acting as business advisors to top management. Financial
managers need to keep abreast of the latest computer technology in
order to increase the efficiency of their firm’s financial operations.

The financial manager stands between the firm’s operations and the
financial (or capital) markets, where investors hold the financial
assets issued by the firm. The financial manager’s role is illustrated
in the next figure, which traces the flow of cash from investors to
the firm and back to investors again. The flow starts when the firm
sells securities to raise cash. The cash is
used to purchase real assets used in the firm’s operations.
Later, if the firm does well, the real assets generate cash inflows
which more than repay the initial investment. Finally, the
cash is either reinvested or returned to the investors who
bought the securities.

The duties of financial managers vary with their specific titles. A
financial planner works under the direction of a manager, performing
various financial or budget analyses. The senior financial planner
supervises the staff in performing financial/economic analyses of new
projects and analyses of merger and corporate growth policies. The
manager of financial planning directs the staff responsible for
performing analyses in several functional areas including profit
planning, capital expenditures, acquisitions, and budgeting. The Chief
Financial Officer (CFO) advises the president of the organization with
respect to financial reporting, financial stability and liquidity, and
financial growth. The CFO also directs and supervises the work of the
Controller, Treasurer, and sometimes the Internal Auditing Manager.
Other duties may include strengthening relationships with
stockholders, financial institutions, and the investment community.
Frequently, the CFO is a member of the Board of Directors and/or the
Executive Committee and as such, contributes to overall organization
planning, policy development, and implementation.

In addition, financial managers perform tasks unique to their
organization or industry. For example, government financial managers
must be experts on the government appropriations and budgeting
processes, whereas healthcare financial managers must be knowledgeable
about issues surrounding healthcare financing. Furthermore, financial
managers must be aware of special tax laws and regulations that affect
their industry.

Although the stockholders own the corporation, they do not manage it.
Instead, they vote to elect a board of directors. In theory, when the
financial manager acts in accord with maximizing shareholder wealth,
the shareholders benefit through cash dividends and share price gains.
With respect to employees, however, maximizing shareholder wealth is
not always in their best, personal interest. For example, when a
company announces a layoff to cut costs, stock
share price often increases, as the secondary market reacts to the
news as an appropriate and proactive approach to reducing costs and
increasing cash flow for other priority projects. From an employee’s
perspective, it’s a loss of job and income.

However, it is also in the best interest of the company to attract and
retain a skilled workforce. If a company has a reputation for paying
poorly, implementing excessive rounds of layoffs, or other
unattractive human resource policies, retaining a skilled workforce
will be difficult, and will have a negative effect on shareholder
value as operational efficiencies, product quality, and speed to
market decline. Here, financial managers
may consider benefits such as employee stock grants and discount
stock purchase plans (or stock options) (Online, Financial Managers).
In this way, the organization can align the priorities of the
employees more closely with those of the stockholders.

Most of the responsibilities of the financial manager are not
straightforward decisions with respect to maximizing shareholder
wealth. Beyond maximizing shareholder wealth, financial managers also
have the responsibility of acting ethically, particularly in today’s
financial markets with increasing media coverage and regulatory
scrutiny over corporate financial scandals, like ENRON and MCI
WorldCom. When Enron and WorldCom went belly-up in 2002 (two of the
largest bankruptcies ever) no one demanded that their stockholders put
up more money to cover the companies’ debts. Stockholders can lose
their entire investment, but no more.

In summary, the task of the financial manager can be broken down into the investment, or capital budgeting, decision and the
financing decision. In other words, the firm has to decide what
real assets to buy and how to raise the necessary cash.
Shareholders want managers to increase the value of the company’s
stock, they are the owners of the corporation; the managers work for
the owners.

The goal for the financial managers is to maximize shareholders
(owners) wealth, not just increasing it or not just profit. How?: by
surviving, avoiding distress and bankruptcy, beating the competition,
maximizing sales or market share, minimizing costs, maximizing
profits, and maintaining steady earnings growth.

The usual method of maximizing the wealth of the stockholders is to
maximize the price of the corporation’s common stock. However, neither
managers nor stockholders can set the price of the common stock; the
market determines the price.

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