CALL US TODAY! 602-989-1592

Financial Leadership………………….

Financial leadership is a trait that most entrepreneurs need to master. The single most feared and neglected part of many small businesses is financial management. Finance is one of the legs of the business tripod, along with management and marketing. Unless the finance leg of the tripod is strong and even with the other two, the chair (business) will tip over. All too often the financial aspects of a business are ignored until a crisis occurs and then the rush begins to try to fix the problem.

I know that many small businesses start without any working capital and they continue their operation the same way. The check book balance is, for the most part, the financial record keeping system.

The vision for the company which was developed in the initial Strategic Focus Plan should always serve as the focus point for all activities. The marketing plan is developed and points the way to how future business is brought to the company. The management plan defines the internal systems used in creating and delivering the product or service. There is another plan that is essential to business growth and that is the financial plan.

The success of a company is measured by its profitability. With the vision as a destination a financial plan has to be developed based upon the current assets that the company has and/or future income that the company hopes to generate through its marketing and management plans. Without such a plan, any excess money is often taken by the owner to reward himself  for all the hard work that resulted in that “left over” cash. There is no thought given to what kind of financial needs the company will need to grow.

Without a budget to act as a guide for growth, the small business may be nothing more than a “job” created by the owner which requires many hours of work and usually provides  less pay than working for someone else.

There are three phases in the budget building process:

1)      The first is the Survival budget: how much is needed to keep the business doors open.

2)      The second is the Stabilized budget: this one shows the point at which the firm can go on to the next step. There is cash in the bank and income has been stabilized ( all the ups and downs are gone)

3)      The last and ongoing budget is the Growth budget: this one is constantly monitored as it the one that opens the doors to business expansion.  Care has to be given that the expansion is  controlled and fits within the budget forecast.

All three budget phases are integrated with the other two legs of the tripod, marketing and management. All three have to be in sync with one another.

No matter your current financial position, budgets for the three phases can be developed. The budgets help set the goal for the marketing; now there is a real number that has to be reached. Saying that the company needs to double its sales has no meaning unless it’s tied into a budget that shows the cost of the marketing effort and the bottom line.

A more detailed plan for the three budget phases will be posted on

“New ways of thinking about familiar things can release new energies and make all manner of things possible.”

Nick J. Petra CFP   your success is our focus    join to  learn the keys to  growing a sustainable and profitable business©.

Leave a Comment

* Copy This Password *

* Type Or Paste Password Here *