“Finance is a broad term that describes activities associated with banking, leverage or debt, credit, capital markets, money and investments”- investopedia.
In another term, Finance is defined as the management of money, these includes activities such as investing, borrowing, lending, budgeting, saving and forecasting.
Finance is the backbone and foundation of every business.
Relationship management is the supervision and maintenance of relationships between a business and its external partners.
Relationship management, as the name suggests, means managing relationships in your life. Traditionally, relationship management means to maintain good and positive relationships between a business and its clients.
Now as a small business owner, what is your financial and relationship goal?
Many small business owners have little or no Financial and relationship goals such as: 1. How do I maintain and track my financial activities?
2. How do I source for additional capital when the need arises?
3. How do I maintain a good business relationship with my bank?
4.How do I maintain a good business relationship with my customers?
5. How do I maintain a good business relationship with my suppliers?
6. When do I need a financial expert in my business?
The only way to keep track of your financial activities is through sound business records. Without sound business records, a business is just a mirage. As a small business owner, you need to keep a minimal record of:
a. Cash book that shows the cash activities in and out of the business
b. Sales day and purchases day book that keeps track of your daily sales and daily purchases
c. Creditors (Payables) and debtors (Receivables) books that track those you bought goods on credit and also you sold goods on credit
d. Stock (inventory) records that show the movement on stock in and out of your business
e. Bank reconciliation that serve as a check and balances between your records and the one the bank keeps for you especially when you are not fully managing the business yourself. They are other records depending on how big a business is, but the ones mentioned are the minimal a small business should have if you must succeed.
Sourcing of fund happens to be the major obstacle many small businesses face, both at the long and short terms.
The sources of fund available for small business owners are:
a. Bank (to be discussed at the point of maintaining good business relationship with your bank)
b. Line of credit (to be discussed at the point of maintaining good relationship with customer and suppliers)
c. Friends and family: a business owner can source fund within the circle of friends and families depending on who is available to listen to you
d. Government agencies, good spirited individuals, organizations and so on.
Maintaining a good business relationship with bank
Well a lot of small business owners rarely distinguish between the function of different banking institutions such as commercial bank, mortgage institutions, Bank of Agriculture, Micro finance bank, Bank of Industry, etc.
All the financial institutions was factored to meet specific needs of the macro and micro economy. As a business owner into agricultural activities, you need to maintain a good business cordial relationship with the agricultural institutions around you. A small business owner into production with some heavy equipment should be looking at Bank of Industry for equipment funding.
Note that Bank of Industry only fund equipment for you, that is you identify the equipment you need and approach them for funding.
As a small business owner into commercial trading, you need the service of the Micro finance bank. Most Micro finance banks offer the services of coming to pick cash from your business place, make deposits in your name. This will save you a valuable business time that you should have used to go and stay in the bank. The relationship a small business owner will enjoy with a micro finance institutions can never be equated to the relationship you will enjoy with commercial bank.
With a good business relationship with a micro finance bank, you can easily source loan, seek financial advice and still remain a king in the eyes of the bank staff. Most small business owners only sort for the services of Micro finance institutions when they discovered that the commercial bank cannot be of assistance to them.
Start from the early stages of your business to sort the service of those banks designed for the particular service or product you are offering to the public.
Good business relationship with customers and suppliers
With a good customer base and good supplier base, a small business owner can easily stand tall. You maintain a good business relationship with customers and suppliers when you maintain a good business ethics, provide a quality service, have a good test of integrity.
A good customer and supplier, who have trusted you, can extend a financial support to you when the need arises. You can get payment in advance from customers when you want to make a product order and a supplier can extend a good line of credit to you as well. All this is dependent on the relationship of trust you have built with them. So, let your yes be yes and no be no in your business.
When you need an expert
You need an expert in every stage of your business. You can’t run a business without the backing of the law, that means you need an expert to get your business registered with the relevant organization. A lawyer or an accountant can get your business name registered at a minimal rate. You also need the services of an accountant to help set your accounting system and help to maintain it for you at a minimal rate also. You need expert advice in relation to tax management, loan management and other financial related matter.
In conclusion, a good financial and relationship management is panacea to small business failure.
Otta Enya Ifeanyichukwu MCIB, ACA, writes from Port Harcourt