Financial statements are essential documents for any business and it’s hence the obligation of the business owner to ensure that these statements are properly tracked. Record keeping of the financial statements has a lot of significance to the welfare of a business be it small or large.
1.) Discuss why it's important for small business managers to constantly analyze their financial statements (i.e. the balance sheet, the income statement and their cash flow statement).
Balance sheets are important because they assist the business owner to evaluate the assets and the capital injected into the business. The owner is also in a position to analyse the liabilities in the business. Likewise, the income statement enables the owner to know whether the business is operating at a profit or loss. The cash flow statement is important as it gives the direction in which most of the cash in the business is directed.
2.) Discuss why developing a marketing strategy is one of the most critical functions of a business.
It is important for any business to initialize a market strategy before introducing any product in the market. A market strategy puts the business in a position to evaluate the performance of a similar product from competitor companies. The strategy gives the business a sense of direction on how best to introduce its product into the market. It also enlightens the business on a variety of measures to conquer the market and to fully counter competition.
3.) There are small businesses who don't bother to write a business plan and they still run successful businesses. Discuss the purpose of writing a plan and how a small business owner can use the plan in managing the business.
A business plan is one of the most important factors before establishing a business. A business plan gives the best ideas on allocation of resources. It also assists in knowing how best to overcome competition in the market. A business plan will also direct the business on the most effective and efficient ways of operation, organizational structure and policies. The goals, visions and missions of organizations are as well developed when formulating the business plan. The business plan enables a business to fully analyze the internal and external environments of a business. The chances of a business failing after a business plan is formulated are low.