For many Individuals, financial
concerns are their number-one stress point. That’s understandable given the
current economic climate, but it’s more important to remember that worry
doesn’t solve much—taking control of your finances, however, does.
The financial difficulties problem is
governed by a number of different legal regulations from different areas. These
include regulations in the area of corporate law, accounting regulations and
insolvency proceedings. The current entrepreneurial environment is very
unstable, with unpredictable conditions the entrepreneurs need to adjust to the
following Steps and Legal Requirements
Identify your stress points. Maybe it’s the threat of a job loss or the
realization that you need to get more serious about saving for retirement, or
perhaps you are dealing with a troublesome credit card balance. Write down your
3 biggest financial stress points. Keeping the list short will help to ward off
the feeling of being overwhelmed.
Give it a positive spin. Your mindset is what will help fix your finances
and keep you motivated to change. Rather than lament that you have too much
debt, imagine how much better your life would be with less. Then make your vow:
"Each month I will spend less and pay enough so my balance declines by at
least $100."
Focus on small, sustainable steps. Determine what you can reasonably
achieve and then dedicate yourself to following through each and every month.
Just as crash diets and insane workout routines typically lead to burnout, you
don’t want to set overly ambitious financial goals that you will abandon in a
few weeks or months.
Make the most of your income. A common speed bump toward reducing
financial stress is the belief that you simply don’t have enough money to put
toward your goals. A spending calculator is a great tool for seeing how much
money you can save by making small changes to your budget. If you’re motivated
to take a more detailed accounting, try the envelope system.
Again, small steps are key. You may not be able to cut any one expense by
$500, but you may be able to identify 5 monthly expenditures you could reduce
by $100. Forgive yourself if you slip up. Sticking to a budget is not always
easy, and there may be days when your resolve falters. When that happens,
remind yourself of how much you have to gain in reaching your goals. Then
examine your spending patterns to see why you overspent. You may need to modify
your budget or your behavior—if you can’t go into sporting supply stores
without buying something, then stop visiting them.
Make it a group project. Every hard task becomes easier with the support
of friends and family, so share your goals. Leaning on your relationships can
also help keep you on track. There’s no better stress reducer than spending
quality time with loved ones.
Legal requirements
Prevention, an early
warning system and respect of entrepreneurial risks are very important. The
goal of prevention is to prevent problems. In order for an entrepreneur to take
preventative measures, he/she needs to have enough information about a potential
problem. It is important to have information on past development, current
processes, the assumed future development and key moments. The source of
various findings may be information on turnover, stock levels, development of
receivables and liabilities, and others.
A risk means the
possibility that what we expect will not happen, or, the opposite of certainty.
There might be a number of risk situations and crises in a company; one of them
is a failed business plan. The reason might be the wrong business activity,
overvaluation of goals, etc. Other frequent problems include undercapitalised
business when the entrepreneur or the company do not have enough equity,
success, fraud, embezzlement, bribery and management failure.
It is important to
respect legislative requirements, for instance those related to occupational
safety or production quality. Another important point is meeting the tax duties
to avoid large penalties. Respecting contractual obligations is equally
important.
Risk policy is used to
prevent negative effect of risks. It is based on the identification of causes
of risks, measuring their degree and protection against them. Protection
against risks means:
1.
Defining the risk
boundaries – outmost points – the best and worst situations
2.
Division of risk
3.
Diversification of
risk - have more suppliers, for instance
4.
Transfer of risk to
other entities – responsibility insurance, property insurance, etc.
5.
Creation of reserves
The most frequent
reasons for corporate problems are bad management and lack of financial
success. In order to avoid such situation, an entrepreneur should observe
several principles:
1.
Before starting, it is
important to have a study prepared on the size of profit the business plan
would bring and compare that to interest rates for financial resources
allocated to the business if they were deposited in a bank. If the interest
rates are higher than the profit, the business is not worth it.
2.
It is good to find
out, or at least consider, whether the provided product or service will be
successful with customers and if they will be interested in it.
3.
When identifying
economic results the entrepreneur needs to look at not only the overall values,
but also the results in the individual areas.
4.
When implementing the
plan it is good to compare the planned results to reality, identify reasons for
deviations and attempt minimisation of negative deviations.
5.
It is good to
continually monitor the financial health of the company through financial
analysis. A financial analysis compares values in the individual years and
compares them to similar companies in the area. The analysis uses several
indicators – indicators of profitability (rentability), liquidity (or the
ability to repay liabilities), activity (turnover), and indebtedness.
An analysis of the
company''s financial situation, with specific procedures and methods, is able
to provide an overview of the comprehensive financial and economic situation of
the company.
The following
governmental and non-governmental institutions and web portals offer further
information and useful services in case of financial difficulties of a company.
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