An entrepreneur while initiating a project needs funds to run, and evolve his project into full shape. Before going in for financial assistance from institutions, he should look into the project in four key areas viz. management, technical, commercial and economic viability and feasibility.

In this, finance is one of the most important functions and foundations of any business. Not only is finance a good indicator of the health of the company overall, but it also holds an important role in managing business growth. Finance is an enabler of opportunities in the market, human resources, new products, creation of infrastructure.

Finance could be sourced either as a debt or equity. Debt financing includes long-term loans, (for the creation of fixed assets) working capital term loans, (for day-to-day operations) and equity financing towards capital (seed funding), especially for start-ups.

In any case, each type of financing has its own unique impacts differently. Debt financing would have a negative cash flow in the teething periods. It is a fixed obligation for repayment, due diligence is required in monitoring cash flow, planning of funds, profitability, break even etc.,

Equity financing does not require the same sort of set of regular payments, in most cases, some level of management interest is seated in exchange for the upfront financing. As both would have disparate effects, the entrepreneur should be able to find a specific balance, or an optimum level of finance to avoid over burdening himself. Keeping financing to a minimum would greatly strengthen the financial health of the company.

Thus, the management of money includes investing, borrowing, lending, budgeting, saving and forecasting. Sound financial management is at the heart of every business, no matter how big or small, without it even viable and potentially profitable business will fail.

Secondly, the deployment of funds i.e. allocating or investing financial resources into a specific project or business endeavour. The entrepreneur should deploy funds to research new products. Effective deployment would yield effective results.

Deploying funds refers the act of strategically allocating cash resources in order to achieve specific financial objectives. It involves a combination of investing, saving and spending in accordance to the company’s financial goals and risk tolerance.

Next comes the diversion of funds. Diverting funds is defined as the use of funds by the debtor in defiance of the authorised terms of the money lender, in a number of circumstances such as the extension of the credit facility, shifting the funds to its subsidiaries or other companies and various other circumstances which are not in compliance with the authorised terms.

The purpose of the assistance should be deployed properly. Diversion of funds would reflect in the erosion of profit thus the financial position of the company would have an adverse impact. The entrepreneur would not be able to get a fair health code for his company and future expansion would be greatly affected. Misconduct in the management would have great repercussions both on the company’s side and management's side. To curb this, an analysis and planning of organisational change management measures to support the transition from the old situation to the new one should be done.

The core part is the reserves which is the earnings that are kept aside for a specific purpose. So reserve should always be there as a contingency measure, in case of a fall, dip in the market conditions, repayment obligations, financial losses, or natural calamities etc., It is a retained earnings secured by the company to strengthen its financial position, clear debts and credits, buy fixed assets, company expansion, investment and other plans. These are usually done to save the cash from being used for other purposes.

Finance is significant in all the business. A high rate of borrowing should be avoided as it will attract a higher rate of interest and would lead to bankruptcy. Many projects and promoters fail due to mishandling of finance, dependence on auditors and concentrating only on the technical and marketing side. They may not be able to know what is their assets value, profit earned and any erosion in the company’s net worth. Thus, the entrepreneur should exercise due diligence in educating himself about the financial aspects of the company and provide a good health code to the company.

Strategic decision-making in business finance is crucial. Financial data such as budgeting, cash flow analysis and financing forecasting provide insights into the overall health and performance of the business. Finally, creating a plan and managing the funds is one of the most critical steps to attain financial freedom. Regulating expenses, having a personal balance sheet, handling extra funds, building an investment portfolio, and developing an insurance portfolio contribute to overall success in achieving the goal.

On the whole, clear business goals should be set for what the company wants to achieve in the next quarter on planning the annual targets, preparation of sensible cash flow, keeping in mind the acceptable level of expenses, making necessary cost reductions, identifying and referring back to past spending and unnecessary or over-inflated costs along the way. The spending should be categorised into needs, wants and savings in the ratio of 50/30/20.

A risk mitigation plan should create room for business, insurance expenses, losses through risky inefficiencies and setting aside resources for unexpected expenses. Especially in turbulent times, making several financial forecasts which would produce different outcomes for the business. One is where revenue is easy to come by and one or two others where times are tougher. Finance is the roadmap for a good successful business journey.

Beyond goals, a good financial plan keeps the company focused and on track the company grows, when the challenges arise and when unexpected crises hit.

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