Financial Goals for Small Business - Assignment Example

?Financial Goals Financial goals I’m still a young lady who’s just 21 years old and planning to complete my undergraduate in spring, 2015. Apart from my studies, I have a small electronic shop that I manage and from it I can get averagely $2,000 profit. Plus my own savings from the money my parents give to me as upkeep and pocket money in school, I can manage to save around $3,000 monthly. It is from this that I thought like a good finance student, that I need to put down my medium-term (1-5years) and long-term (5-10years) financial goals. Therefore, for the next 5 years, I would like to save $50,000 to enable me expand my small electronics shop to a larger one with at least 2 branches. I would also like to pay for a down payment on a house in the next five years being that I would have graduated and would like to be on my own. The down payment of the house would be $20,000 which I’d like to save for and pay over five years. Over the next ten years however, I would expect that my kid shall have become old enough to begin going to school, therefore, I’m going to save $50,000 to enable my kid go to school. The list of my goals and how they’ll be achieved are in the table below; Financial Goal Time Frame Amount Monthly Cost Save for House down payment 5 years $20,000 $333.33 Save for Business expansion 5 years $50,000 $833.33 Save for Child’s Education 10 years $50,000 $416.67 Total monthly cost $1583.33 Cash Management Since I know very well that money must be well planned for, for one to achieve her goals, I will apply proper cash management skills in order to be able to achieve my goals. For instance, my parents give me $5,000 monthly for personal use after paying for me all my bills and buying for me all I need. I sat down one time and realize that if this money is managed well, and I save just $1,000 0ut of it monthly, I’d be having $60,000 after 5 years. This saving has helped me so much and from it, I’m proud to say I started my small electronics shop. I’ll continue saving this money for the next five years since it helps me with emergencies sometimes, apart from helping me with my savings to meet my financial goals. It is not easy anyway to be a good financial or cash manager. This function involves self denials of pleasure and leisure to make sure you put your money into proper use. In the next ten years, I’ll try to reduce on my daily spending on clothing items and shoes as well as snacks just to enable me to save some money to meet my financial goals. I’ll try to use a budget for every shopping and avoid impulse buying. My shopping list in that case will have a few of unnecessary and luxurious items. I’ll just go for the major items that will keep me going as long as I meet my financial goals. Credit and Debt Management During the next five years, once I get employed and be on a payroll, the first thing I’d like to do is to see my small electronic enterprise spread to most parts of the State. This would require much cash, I know. But I’ve a plan to obtain a $2 million credit from the bank to enable me expand the business first in every part of the State, then in the next ten years, take it to other States after getting enough capital. I’ll choose a bank that gives credit for businesses at an affordable rate. That will mean that I’ll have to shop around for the different interest rates that different banks charge for their business loans. I’ll be able to service my credit from the revenue I get from the business as well as with part of my salary. At the same time, for me to make bigger sales, I’ll have to supply my products to retailers at affordable prices for them also to make profits. I’ll be able to consider some retailers who can only manage to take the products on credit and pay later after they make some sales. In this case, I’ll make the bank be the one to collect my debts on my behalf from my debtors. This will be an efficient way of debt collection as it’ll enable me to transfer the risk associated with the collection of these cash from me to the bank. Risk Management As a good finance student, I know very well that all kinds of businesses are risk associated; hence, I’ll have several ways through which I’ll be prepared to manage my risks in case they occur. For instance, business cannot be good all the time. There might be times of low sales and other times when the business does not make any positive proceeds. There might be cases of fire or theft/robbery that might take place in my business. There might also be other risks associated with terrorist attacks that might affect my business. Therefore, in the next five years, to be ready to handle any risk at any time and keep my business not disturbed by any of these, I’ll have to insure my business. There are various insurance providers in the market, therefore I’ll shop around for the best insurance firm that will ensure that my business is covered and charges not very high rates. In the next ten years, by opening different branches of my business in various cities and states, I’ll also be able to manage risks by spreading them geographically. For instance, in case my business store in California is attacked by robbers, the one at Virginia will remain at least to help me raise the robed one to start up again. The business itself will be able to manage risks of low sales by itself since will incorporate several electronic products, not just a specific one, so that sales per day could be higher. With part of my salary, I’ll also be able to save personally for my retirement so that in case I retire, I can be able to sustain myself financially. Wealth Building During the next five years, just has I’ve illustrated, I’ll be able to involve in expanding my electronic business to all parts of the State just to build more wealth. This will be done by using my savings and also the credit that I’ll obtain from the bank. Again, for the next ten years, I’ll be able to invest into the stock exchange markets where I’ll purchase shares of a given company when their prices go down and sell them when the prices rise, making profits. This, I will manage through getting the correct timing information from trusted brokers. In this way, I’ll be able to save as I invest at the same time. I’ll direct my retirement benefits to invest in mutual funds where a fixed amount will be withdrawn automatically, direct to the investment. Therefore, instead of only saving my retirement money, I’ll be able to invest with it such that, by the time I retire, I’ll be able to have accumulated much wealth for myself and family. I’ll be able to intensively capitalize on my business so that it be much flourishing and with much profits coming from numerous branches that I shall have managed to open up using my savings and credits from the Bank. Financial Success By retirement, my retirement benefits shall have obtained much more proceeds from the investments in mutual funds I put it into, and this will be my first successful financial achievement. My businesses will be all over the USA and beyond, trading with other countries and making millions of dollars per day; this will be my second successful financial achievement. By retirement, I’ll be happy to see that I’d finished paying for the house I paid its down payment amount within my first five years after graduating. By being able to participate in capital investment in stock exchange market, I’ll be happy to be enjoying my long term proceeds from such investments. By my retirement time, I’ll be happy to realize that my social fund will also be available there for me to use so that I can be able to manage my financial demands even without being employed. I’ll still have my businesses even after retirement, therefore I’ll be happy to have employed many people through my business and also employed myself and all were only possible through good financial management. In conclusion, it is very important to have financial goal which is realistic, measurable and specific. There should be a good plan to achieve the goals you have laid down. Good cash management will help you achieve your goals. Remember to have a provision for risk management and build your wealth by investing and expanding your investment around. Read More