Smes, Family Involvement, And Financial Management

As the first accounting employee at a start-up technology company, success presented itself as an endless opportunity and involved an array of subject matter. Tasks ranged from establishing an accounting system, implementing processes and hiring staff, to developing reports, performing operational analysis and preparing budgets/forecasts. After six years of dedicated effort, there is now a functioning Finance department

What makes a large organization like Wal-Mart financially successful? One could say it is the result of outstanding personnel or perhaps a strong determination to succeed. These factors certainly contribute. However the key to financial success in organizations lies in good accounting. Since early civilization began, accounting has been an important part of our financial transactions. In today’s world our use of modern accounting systems and accurate financial statements are critical components that make modern organizations successful. To facilitate understanding of this point one must understand how

In “Ownership of an Enterprise Built to Last,” Poza speaks on how the ownership of a family business should be structured, in terms of how much share and corporate control individual family members receive. He also explains that although some family

In an era of globalisation what is the future for family-run businesses? Discuss using examples from two sectors?

Bragg, S., & Burton, E. (2006). Accounting and Finance for Your Small Business (2nd Ed.). Hoboken, NJ: Wiley and Sons, Inc.

This paper examines how accountants act as business advisors to small businesses, causing them to have a lower risk of failure and higher growth rate than those who do not. The research findings of Barbera, Hasso, and Rajavel were extremely helpful in supporting this thesis. Dr. Rajavel studied failing or failed businesses in an “economically resourceful” set of islands in the Bay of Bengal. He published a journal article based on his findings entitled “A Study on Causes for Business Failure: An Empirical Analysis”. While his writing mainly discussed the causes of business failure, he also advises entrepreuners to seek the help of those professionals necessary to prevent their problems (2013). Francesco Barbara and Tim Hasso elaborate on the lack of previous research into the importance of an accountant, especially in the small family-owned sector. They compared 2,004 of these in the Business Longitudinal Survey (BLS) of Australia and found the majority to currently or previously use an outside accountant. They compare young businesses to old and confirm the advisors who get to know their clients help younger companies gain stability and help older companies increase growth (2013). With such limited research in this area, these researchers play a key role in the information provided within.

Berry also stated, “That corporate owners ' equity statements go into detail about stock sales, retained earnings and long term investments held by the company” (Berry, 2006). Financial statements also investigate into pension liabilities and capital gains/losses on liquid investments (Berry, 2006). Berry stated “small business owners ' equity statements are much less complicated than their corporate counterparts” (Berry, 2006). According to Berry (2006), a statement for a small business can detail any changes in the balance of cash accounts on which company owners have the right to withdrawal, showing the net increase or decrease in the balance for the period in question (Berry, 2006).

As with any company, operational and leadership management are two major roles in the success of a business. However, the business’s financial condition is vital to the growth and prosperity of the organization. In an entrepreneurship or company, the financial aspect is crucial in developing and maintaining a successful business. The organization needs financial documents to allow the company adequate information to operate and become a thriving business. There are many statements and financial sheets available to report monetary knowledge the company will need for all future planning and directing (Bethel University, 2011). Income statements, balance sheets, and cash flow statements are a few that are attainable to allow economic review of a company.

Small businesses occupy a very important place in the economy. These businesses face many of the same problems such as lacking computer experience and do not have sufficient internal computer expertise and decisions as big firms but without the benefit of staff expertise and multiple managerial level. Thus, the top manager or managers

Because the family business it so new, family paradoxes like making time for family trips and vacations may arise. For the 2nd generation the family business is more family focused. The paradoxes that arise are often regarding whether the revenues should be used to give family members larger salaries or update equipment. The 3rd generation is often more business focus, but it’s focus is extremely different from G1. This third generation is often searching for way to include all the members of the founding family and their unique skill sets to expand the brand, oversee the philanthropy activities and handle other areas of the family business besides production. The reading shows that the family priorities for G1 is roots and wings, for G2 is work and home, and for G3 is loyalty and freedom. The key impact areas of strategic choice for G1 is action and planning, for G2 is opportunistic and core, and for G3 is invest and harvest. The key impact areas of management philosophy for G1 is expedience and patience, for G2 is task and process, for G3 is privacy and transparency. The key impact areas of decision making for G1 is control and trust, for G2 is individual and collective and for G3 is formal and informal. The key impact areas of ownership focus for G1 is proprietorship and stewardship, G2 is merit and equality and for G3 is one family and individual branch.

The greatest threats to the progress, success and endurance of the family firm are familial relationships. Stakeholders which are mainly considered in the planning process are spouse, children, employees and their families, vendors, suppliers, consumers and the community. It is important to ensure that if there is going to be a transition in leadership, the people who are selected are well-qualified enough. Not only are the employees to be considered, but their families who are dependent on them should be considered as well. The success of customers, suppliers and vendors is entirely dependent on the degree of success of the family firm. They have an indirect investment in your company. The community is dependent on your financial as well as social deeds. Contribution of services and manpower, charity, and taxes make you an important part of the community, and the community comes to depend on the organization.

Compared to non-family firms, family members as managers and/or owners of a business are often more loyal and dedicated to the family firms, which can strengthen the company. However, as the family firm and the owner’s family get larger and stronger, problems may occur because the dynamics of the family system and the dynamics of the business systems are often not in balance. Firstly, the interests of a family member may not be aligned with the interest of the business. If owners’ son wants to be CEO, but he is not as competent as a non-family member, the interest of owner’s son and the well-being of the business is in conflict. Secondly, the interests of the entire family may not be balanced with the interests of their business. A family may need its business to distribute funds for living expenses and retirement which the

Beehr, T., Drexler, J., Faulkner, S. (1997). Working in Small Family Businesses: Empirical Comparisons to Non-Family Businesses. Journal of Organizational Behavior, 18(3), 297-312. Retrieved from http://0-www.jstor.org.helin.uri.edu/stable/3100146

Family Firms are the most common types of businesses in the world. They are dynamic and play an important part in the world economy. The earliest forms of family business were farms. In the U.S., 90 percent of American businesses are family firms. These firms provide employment for half of the population and account for around half of the GDP. The composition, management and ownership of a family firm is a complex and complicated process that involves specialized knowledge and skills in order to operate effectively.

According to recent report from Bolshaw L. (2013), there were more than 500 UK SMEs failed in operation due to financial problems. From this research, people can see the importance of finance and accounting in nowadays business world (Vitez O, 2014). In this report, the paper will be divided into two parts, which aims to answer two following questions. In order to answer the first question, this paper will discuss how each part of the working capital cycle could be improved and evaluated the implications of the improvements on XYZ and other connected parties in terms of trade receivables and trade payables. In addition, to answer the second question, this paper will formally show the evaluation and discussion of the relevant costs, income and qualitative factors to allow the SMA to reach their goal and decision-making. Moreover, the skills in key areas; roles and limitations of management accounting theories are analyzed critically based on given information.