An accountant may be compared to a skilled laboratory technician who takes blood samples and other measures of a person’s health and writes the findings on a health report (a set of financial statements). A financial manager for a business is the doctor who interprets the report and makes recommendations to the patient regarding changes that would improve health. Financial managers use the data prepared by the accountants and make recommendations to top management regarding strategies for improving the health (financial strength) of the firm.
A manager cannot be optimally effective at finance without understanding accounting. Similarly, a good accountant needs to understand finance. Accounting and finance, finance and accounting – the two go together like bread and butter.
Financing a small business is a difficult but critical function if a firm expects to survive those important first five years. The simple reality is, the need for careful financial management is an essential, ongoing challenge a business of any size must face throughout its entire life. Financial problems can arise in any type of organization.
When you read the financial literature, you find that there are many articles about the difficulty of finding start-up funds for new businesses. You have read how venture capital firms are pulling back from making such loans; so are banks. In short, this is a very difficult time to get financing for a new business venture.
Think of how difficult it will be, therefore, for new business ventures in South Africa, Poland, Hungary, China, and other newly developing 247countries to get financing. The risks are great, and the managerial expertise is sometimes limited. Yet the future growth of the whole world depends on the growth of entrepreneurship throughout the world.
What can be done to help the entrepreneurs of developing countries – get the financing they need to start new ventures? One answer is for firms in developed countries to set up joint ventures with firms in developing countries. Such joint ventures will open new markets for the firms of developed countries and provide the financing needed by less developed countries (LCD’s). Another answer is for venture capital firms to expand world wide. The risk may be great, but the potential for gain is just as great. Often, the capital needs of firms in less developed countries are relatively small. Sometimes $1,000 is all that is needed. The government could promote such investment by giving tax breaks to those
firms and individuals that provide capital for entrepreneurs in LDSs.
Everyone in the world needs to start thinking globally if we are to make optimum use of the world’s resources, especially the world’s land and labour resources. There is much productive talent waiting to be freed by the availability of capital (financing). By helping to provide start-up capital to farms and other businesses throughout the world, you and I, the business community, and non-profit organizations can do much to end hunger, poverty, and disease in the world.