Part 3
Financials Affecting Business Decisions
An average adult makes more than 35,000 decisions per day. For business owners, the number is possibly much higher. Business owners play a role in making decisions for their company, regardless of its importance. Hence, one needs to understand the types of business decisions to assess whether the decision is appropriate for its existing growth stage.
Financial analysis is one method that provides the most insights to a business owner regarding decision-making processes because financials are important for the business and stakeholders. Thus, businesses must adopt the right tools to analyse and forecast their financials to measure profitability and sustainability.
In addition to measuring profitability, financial insights can also highlight the outlook of the company's financial situation, allowing business owners to identify signs of financial distress and risks if any. Warren Buffett once said, "Risk comes from not knowing what you're doing." Therefore, financial risk assessment is an essential element for businesses to become successful. By adopting a proper risk assessment framework, companies analyse potential risks early and take suitable approaches to avoid losses.
With the right understanding and projection of the company's financials, business owners will then make more informed business decisions.
You will learn to identify and understand the different stages of business growth and the types of business decisions made in each stage.
To further analyse and forecast your financial data, you will learn the different types of forecasting methods. Subsequently, you will learn to identify the warning signs from your financial analysis and the right time to finance your business.
You will learn to conduct a risk assessment on your business financials, using a step-by-step guide on identifying, analysing, and treating the risk.