Finance and the Small Business 

Considering the current financial strain that all businesses face in today’s economy, the terms “Finance” and “Small Business” may seem like the ingredients of a really bad oxymoron. For most entrepreneurs, the two simply don’t fit in the same sentence – let alone the same title. Regardless however, of the pinch that all businesses and all industries are feeling today, the term Finance and its dreaded twin Financial Management remain a crucial part in the development of any business. 

 If one agrees that the primary objective of a business is to generate profit, then we should also be willing to accept that, proper Financial Management will be a driving force towards achieving that objective. Having one without the other is akin to wanting to enjoy the fruit but at the same time refusing to cultivate the fruit tree. For the business owner, proper Financial Management involves understanding and controlling both the internal and external facets of a business’ monetary resources in order to ensure sustainability and growth. It’s a lot to take in I know, but let’s break it down for you just a bit.

 On the internal side - the entrepreneur/ business owner would need to have knowledge of his profit margin on each item sold. He needs to be able to calculate his gross profits while carefully controlling the administrative and other fixed costs that tend to slowly nibble away at a healthy bottom line. He also needs to cautiously maintain a healthy cash flow – the blood line of the business, ensuring that there is always sufficient funds available to meet day to day operational expenses.

 On the external side - an astute business owner needs to have a thorough understanding of the financial products available to him through the various banks and financial institutions. He needs to know which products best suit his needs for eg.  , Should he apply for a new five year loan or can he simply get a recurring credit line such as an overdraft facility which can be used to get him over those slow periods? Similarly, which type of account is more suitable to achieving his objectives; for instance, while a chequing account allows ease of payments to his creditors, that type of account offers zero % interest on deposits as opposed to other accounts. That being the case, he can maintain only necessary amounts in his chequing account while allowing the bulk of the business’ cash to grow through an interest bearing account such as a savings account or other investment.

 Come 2014, if you are not too clear about the various aspects of your business finances as briefly described above, then there is no need to threat – SEDU wants to assist you. As part of our upcoming Entrepreneurial Development Programme – we are offering an introductory course in Financial Management. Courses are expected to commence in February 2014 and will cover a full range of topics on both the internal and external facets of Financial Management for Small Businesses. Whether you’re just thinking of establishing your own business or want to learn how to better manage your business’ money this is the ideal start for you.

 For more information about our Financial Management Course or SEDU’s Entrepreneurial Development Programme, please contact SEDU at the Ministry of Commerce, Business Development, Investment and Consumer Affairs, telephone 468-4223/453-2891, e-mail: sedu@govt.lc. Also log on to our website at www.commerce.gov.lc or check us out on Facebook at https://www.facebook.com/SEDUSLU. We’re always happy to hear from you.

 Note also – that the Ministry of Commerce will in 2014, be developing an official policy on Micro and Small Enterprises in Saint Lucia. In this regard, we are inviting all Entrepreneurs, Business Owners, Managers, Operators and the general public to provide comments, opinions and feedback. What’s affecting your small business, and what is hindering your ability to take your business to the next level? We look forward to hearing from you.