World over, just like it the case here in Uganda, many business are started every year, and only a small fraction of them survive till the second birthday, in case they made it to their very first birthday. Many reasons may be advanced, but it all boils down to one thing; there is little or no cash to sustain the business and it thus becomes inevitable to close shop. Therefore finances are very important for the survival of any business and thus must be accorded due attention. This brings us to the subject of Financial Management.
Every business especially start-ups should be aware that financial decisions even when made at an early stage can be the most important, as well as the most difficult to make. The ability to raise the right finances, putting in place the right controls, and planning financial matters effectively are key ingredients to supporting business growth and enabling adaptability to the ever evolving business environment.
Businesses need to keep all financial records and later produce financial reports. These reports serve different purposes for both control and planning. Important to note is that small businesses who prepare their own financial statements often need the support of professionals to address financial and business issues including cash management, debt advice and management structures. When these businesses grow, they may find themselves subject to a statutory audit requirement as turnover increases.
Small Businesses owners should also be aware that whereas it may not be mandatory to conduct an audit, one should consider having an external assurance assessment of their financial information in order to build confidence with other external stakeholders such as tax authorities and banks.