Financial management- personal and business level.

Economic crisis is not the cause of business collapse

Many businesses today have been brought down not only by the global recession but also by mismanagement. It is not in order to assume that the global economic crisis should only be working against your business. Many managers who are failing today are blaming the bad economic conditions for their poor performance. A good business manager should be able to look for effective ways of handling a bad situation and getting the best out of it.

One of the most deceiving business ideas is that by putting your eggs indifferent baskets, you are going to be successful. Most of the managerial trainings include what is commonly called ‘portfolio management’. This theory supports the idea of investment diversification. This is why managers think that during bad financial moments for the business, they need to diversify their investments in order to reduce the risk of losses. This may not be a solution if the management style is wrong. A poor manager will still fail even in a diversified portfolio.

Many are left wondering about what they should do if diversification is not working. The truth is that diversification should only be left for those who are not sure of making it in one line. Instead of diversifying your investments, you should be thinking of specialization.

You should be looking for the best business strategies that can make you a king in your line of operation. Unfortunately, many business managers view success as only retaining some profits for the business. Very few people are endeavoring to be the most outstanding businessmen.

Tuesday, August 25, 2009

Financial management- personal and business level.

Going through the financial crisis, either at a personal level or in business is one of the most disturbing experiences. It is hard seeing your highly prized possessions or business property that you have worked for along time, being disposed to keep you or your business going. Financial crisis is usually painful as you see your status in the society taking a nosedive, while the people expect you to continue with your position with the money you do not have. Anyway, such kind of misery and pain should leave you a much stronger person and not heart broken.

Many financial crisis only comes because of lack of plan or those which are fragile and cannot sustain your needs. Those who do business face a great risk of failing dramatically especially during economic recession thou those in employment are not totally invulnerable. All that one needs to understand is that financial planning forms a major part of our day to day life and dictates who we become and what we can do in the future.

At a personal level, it will be sad to see someone who retires from a luxurious corporate life full of holidays in the best resorts in the world to lack stricken life. This is where many understand that they had not planned their money well during their working years.

For those in business, it is more frustrating to see organizations laying off most of their staff to try and cut down on costs. One would wonder why a global recession which only lasts for less than twenty four months should bring down a company that has existed for the last thirty years. How would you explain that except by seeing how bad the finances of that company were managed?