In the management of a business certain factors are essential for success and survival apart from everything we have listed above. They include–
- Time management
- Community obligations
- Continuing management education
- Management succession and business continuity
We shall now examine all these:-
Time Management
Time consciousness is part of planning. Timeliness is said to be next to Godliness. With proper time management a lot of set targets would be met. It has been said that one realises the full importance of time only when there is little of it left. Every man’s greatest capital asset is his unexpired years of productive life. To manage time, effectively the manager should:-
(i) Rank his daily jobs in order of priority.
(ii) He should decide which job can best be delegated
(iii) Determine Where time can be saved in the long run by adopting suitable procedures.
(iv) Select or fomulate suitable aids to time economy.
Community Obligations:
Businesses should be responsible and responsive to the demands of its host community. These according to Oyedijo consist of:
(i) Paying adequate compensation for land acquired by the company.
(ii) Considering the interest of the community in transportation policies, i.e, routing of vehicles, flexible working hours, etc.
(iii) Fostering peaceful relationships with the public at large and the local community and promoting inter-communal relations.
(iv) Contributing to the well-being of the local populace by providing subsidized amenities and social services and by avoiding damage or nuisance to life and property therein as the result of industrial or other activities.
A practical example of communal neglect by business organisations, is currently happening in the Oil producing States of Nigeria. Both the federal Government of Nigeria and the Multi-National Oil Companies that are making fortunes out of the ecological problems resulting from oil prospecting in the oil rich states have refused to assist these states despite all the visible problems. These exploitative tendencies of the oil companies had been going on for decades. The community became restive due to the nonchalant attitude of the companies and the Federal government. The outburst of these communities resulted in the companies losing both men and materials to the agitating community If the business organisations had obliged the communities as required and expected the problems that resulted could have been avoided.
Continuing Management Education
Continued management education and development will go a long way to ensure fitness and continued existence of the business Change is realty every business manager must lace. The passing of each business may bring, with it new pressures for possible changes in philosophy, product, programme, processes or procedures.
Management Succession and Business Continuity
Lack of delegation and ever training could hamper a succession plan. The fear of the incumbent director of possible loss of authority or control may result in non-development of the subordinate. The plan for management succession and perpetuation of the business should begin years ahead of the time the owner or m manager expects to retire Business owners planning for succession and continuity should consider the following:-
If he has a son or relative that will be willing to take over the business
If not, will any manager like to take it over?
How to train successors.
Finance and Accounting Functions.
The activities of management have been identified to include finance accounting, production, marketing, development, quality control among others. The interdependence of these area is necessary for effective and efficient results. Management must therefore not only be concerned with production and marketing but also with the other supporting or complementary activities.
In this topic of discussion we will looks at two activities of management namely finance and accounting from the management viewpoint. The nature, scope; functions as well as importance of each of these activities are focused with the am of giving the reader the necessary rudiments of these areas of management.
Finance and Financial Management
The concept of finance can be thought of in two ways. First, finance refers to the monetary or capital resources used by the business in the acquisition of other resources or investment assets. Second, it is thought of as the management of the monetary resources of the organization,
This latter perspective of finance is better refered to as financial management. Financial management is the managerial planning and controlling of the financial resources of a business in order to achieve the organization’s overall objective. The objective of financial management is to increase shareholder’s wealth. This is achieved by maximizing returns and minimizing risk. The finance strategies are concerned with the acquisition and allocation of capital and the management of working capital and dividends.
To further appreciate the conceptualization of financial management given above it is necessary to highlight the concepts which underline the definitions. To this extent the concepts of capital, working capital and dividends should gain some attention.
Capital as earlier mentioned means the financial resources used in business for investment purpose. Working capital is the proportion of capital used for the day to day running of the business and that which ensures that the business does meet its short-term financial obligations. Dividends are the returns received or receivable by investor from the profits made by the business organization
The Finance Function
Pandey (1979) categorized the finance functions into two. These are the managerial finance functions and the routine functions. Management finance require the managerial functions of planning, executing and controlling of financial activities while the routine functions are supportive functions of managerial finance functions and require less managerial skills.
Managerial finance functions include investment decisions, financing decisions, dividend decisions and liquidity decision.
Investment Decision
An in vestment is the commitment of funds on projects, assets, or financial instruments over a period of time with the aim of generating revenue which is in excess of the funds so committed. As there are unlimited investment vehicles, investment decision involved the allocation of funds on competing projects whether new or existing one.
Investment decision deals with the acquisition of long-term assets as they generate the profit required to compensate for the risk of investing. This aspect of finance is called capital budgeting. It requires the estimate of the cost of capital, risk, as well as expected cashflow from the project. The activities involved in this decision may be complex in practice.
Financing Decision
After identifying profitable projects, it is necessary to determine the source(s) of finance for the project. It is important to note for now.that the sources of finance available to the firm can be internal (equity) or external (debt). In addition, each of the sources of finance is not cost free.
For this reason, management must determine the least cost source of finance, which would guarantee maximum returns to owner, of the business.
Dividend Decision
Dividend is the proportion of the company’s profit (alter interest and tax) distributed to shareholders as returns. Shareholder invest in companies 1or two reasons. These are returns (in form of dividends) as well as capital gains.
Capital gain is the positive difference between the cost of acquisition of the investment at the time of purchase and the revenue received at the time of divestment, The issue is that any profile not declared as dividends are ploughed back to the company as retained earning which inevitably generate further profit, thus leading to the growth of the company and appreciation of its markets price.
The Increase In market price improves the value of capital gains. However, shareholders are usually more interested in dividends as they are more certain than capital gain. They are also ordinarily not expected to hold on the shares for a long time. Management must therefore determine the dividend policy, which balances the expectation of dividends and growth through retained earnings.
Liquidity Decision
Liquidity refers to the ability of the firm to meet short-term financial obligations as at when due. While long-term assets generate profits, short-term assets guarantee liquidity. The firm must determine what proportion of its total assets to hold in short term assets.
It is important to note that a firm may be profitable yet liquid, liquidity is often a ground for the liquidation of the firm by creditors. For this reason, even a highly profitable firm must also consider liquidity. Ensuring liquidity requires effective management of working capital. In addition to the managerial finance-functions the. routine finance-functions include:
(i) Supervision of the managerial finance functions.
(ii) Custody and safeguarding of securities. insurance policies and other valuable papers,
(iii) Taking care of the mechanical details of new outside financing,
(iv) Record keeping and reporting