Why is Financial Planning & Savings important in business and (every-day life)?
When you run a company, there are challenges every day and sometimes you laugh at instances when things do not go your way. In the last several months, I have finally begun to realize savings & financial planning are critical in running a business (or for that matter in our every-day life).
Difficult to borrow when there is a dire need: When there is a need for you to borrow, everyone will be cash tight (they may/will really be cash tight). 1 out of 10 people you talk to may have liquid cash in hand. You may have to hit a 100 people to find 10 prospective lenders and 1 on 10 maybe willing to lend you money. It is a process.
Family Concerns: Family takes a priority over everything. Having to borrow also takes a toll with your family. You would have your immediate family members lecture you on financial planning (‘I have been telling you all this while to plan’. (This is certainly a genuine concern and they are right.)
Firefighting: It is always easy to plan/ save when things are going well. You never know what is in store (good/bad) and when things do not go as planned, you end up fire-fighting the problem. You also lose time to execute on your immediate needs or plan for the future. It will take a while for you to get back on track.
Lose out on opportunities: You may have to lose out on good opportunities and also time which could have been effectively utilized and spent.
Interest Rates: This depends on where you borrow and who your lender is/what equity you provide for the loan. This adds to your monthly burden and is a cost which needs to be accounted for.
If there is cash in hand/your finances are strong, you always are in a better boat. Things are in control. Everything is within reach. You could leverage your financial position, have the luxury of time, plan and execute better. Begin saving & planning today – March 31, 2014.
P:S: I am no expert in financial planning/savings. Intend & have begun to work towards it.