What are the differences of financial forecasting when comparing small and large businesses?
Modernaire asked:
I just wanted to know for my business assignment, the advantages and disadvantages of financial management for larger business and small businesses
Basil
I just wanted to know for my business assignment, the advantages and disadvantages of financial management for larger business and small businesses
Basil
October 24th, 2008 at 11:00 am
The mechanics are pretty much the same.
Financial management is key in any size business.
Percentages are a common denominater.
Those will be different in a small business where the owner may produce a portiion of income, which lowers the selling expense.
As for forcasting, a large National or International corporation has to consider a broad customer base.
A small business, with one location in a city must consider the local customer base, which sometimes is a limited area of the city.
This case involves keeping the regular customers and reaching out to newcomers to the neighborhood.
Death of customers must be replaced by new customers.
Consider TV ads and Yellow pages. These medias reach hundreds of miles from a small business location. They cost a fortune and reach customers that will NEVER be seen.
Advertising is better spent and more cost effective in reaching the areas of customer base.
Expanding the business involves a whole new approach in determining a new location. Demographics and location are important considerations, as well as growth areas within the city. This is quite involved.
It’s very important to know from where, the area, customers are coming from.
Today, with the cost of travel, customers will not shop too far from their homes, even for some savings. Malls have sprung up nearby most subdivisions and those customers will pay a bit more to conserve travel time and gas.
Consider this.
Walmart.
They may know that a Super Mart is drawing customers from an area some distance form the store.
AHA! We should open a store in that area. And they do.
BUT! What happens?
The original store has LOST customers from that area.
Yes, they still sell to those customers, but at a higher cost for a new operation.
So, they must re-plan the original store to allow for a loss of custiomers. Additional growth in the area may come, and they have to rebuild their customer base.
Same with any large department store that expands into new malls.
Too much to further discuss here.