Being aware of the costs associated with starting, running, and maintaining a business is crucial to the sustainability of the business.
In this Module, you will develop an awareness of the costs incurred when creating and managing a business and of ways to keep up with those costs by using proper accounting methods and systems that are universally accepted. You will also discuss the financial management process and its components, the importance of having the knowledge of money in a business, and an overview of business taxes and how to keep track of them.
In this Module, you reviewed the costs involved in the process of creating and managing a business; the financial management process, including financial statements, forecasts, budgets, and financial ratios; and the impact of business taxes on business and how to keep track of them. You also discussed the financial strategies and the legal issues related to starting and running a business.
In this module’s second assignment, you will develop the third part of a business plan and submit it. In the third part of the business plan, you need to prepare a simplified financial plan for the business initiative being developed in this course.
Complete the following readings early in the module:
From your course textbook,Entrepreneurship: Starting and operating a small business, read the following chapters:
Understanding and Managing Start-up, Fixed, and Variable Costs
Using Financial Statements to Guide A Business
Cash Flow and Taxes
Addressing Legal Issues and Managing Risk
From the Argosy University online library resources, read the following articles:
Huyghebaert, N., & Van de Gucht, L. M. (2007). The determinants of financial structure: New insights from business start-ups. European Financial Management, 13(1), 101–133. doi:10.1111/j.1468-036X.2006.00287.x
Phillips, J.J. (2003). ROI best practices. Chief Learning Officer, 2(6), 50–52. Retrieved from http://media.roiinstitute.net/articles/pdf/2007/10/07/ROI_Best_Practices_-_Business_Intelligence.pdf
Global Risk Alliance Pty Ltd. (2005). Risk management guide for small business. Retrieved from http://www.significanceinternational.com/Portals/0/Documents/2005-sme-risk-management-guide-global-risk-alliance-nsw-dsrd.pdf
Smith, C.W. (Jan 2007). On governance and agency issues in small firms. Journal of Small Business Management, 45(1), 176–178. ProQuest Document ID: 221003174) Retrieved from http://search.proquest.com.libproxy.edmc.edu/docview/221003174?accountid=34899
Assignment: Discussion—Forecasting and Preparing Financial Statements
Tina, one of your friends, approached you and proposed a partnership in a new venture that she is planning to start—a fashion boutique that will sell women’s clothing and accessories. She told you that she leafed through several books on how to prepare forecasts and pro forma financial statements, but the books were geared toward existing firms that have several years of historical financial statements on which to base their projections.
In this assignment, you will review the accounting concepts and financial statements presented in this module to critically evaluate the challenges faced by your friend in her new business venture.
Respond to the following points:
If your friend asked you for advice on how to prepare forecasts for a new fashion boutique for women, what would you tell her?
As a potential partner, what would be the important financial statements to be in place for an initial assessment of the venture? Provide details and justification of each choice.
By Friday January 11, 2019, in about 300 words, post your responses to this Discussion Area.
Write your initial response in 300–500 words. Your response should be thorough and address all components of the discussion question in detail, include citations of all sources, where needed, according to the APA Style, and demonstrate accurate spelling, grammar, and punctuation.
Do the following when responding:
Read your answers. Provide substantive comments by contributing new, relevant information from course readings, Web sites, or other sources; building on the remarks or questions; or sharing practical examples of key concepts from your professional or personal experiences Respond to feedback on your posting and provide feedback on their ideas. Make sure your writing is clear, concise, and organized; demonstrates ethical scholarship in accurate representation and attribution of sources; and displays accurate spelling, grammar, and punctuation.
Quality of initial posting, including fulfillment of assignment instructions
Reference to supporting readings and other materials
Language and grammar