The major difference between business and financial risks lies in where there is a shortfall. Business risk exists when there is not enough cash to meet the day-to-day operating expenses of the business, but financial risk involves the lack of cash necessary to pay creditors. One type of risk sometimes occurs in the absence of the other, or they may both happen simultaneously but independent of each other.Know More
According to the Houston Chronicle, business risk has nothing to do with the amount of money a business owes the bank or those who invest in the business. It deals exclusively with not having enough money to pay the rent on a building, wages to the employees or suppliers of good to be sold. It even includes not being able to pay light and telephone bills or taxes. Systematic business risk occurs when the economy is bad, affecting most businesses. Unsystematic business risk applies to a specific company or type of company that is struggling.
Financial risk, on the other hand, deals solely with the lack of income to pay back borrowed money. Often when a business gets behind financially, the owner borrows the money to pay daily expenses. If business does not improve, he not only does not have the money to pay those expenses when they occur again, but now he has a financial obligation to a creditor he is unable to fulfill.Learn more about Financial Planning
Although there are many similarities between a traditional and a Roth IRA, there are a number of differences. The primary difference is that Roth IRA contributions are not tax deductible, while traditional IRA contributions usually are at least partially tax deductible. Additionally, the Roth IRA has strict income limitations that restrict who is eligible to contribute.Full Answer >
A business owner can use financial management to gauge how his business is doing financially and create a more successful company through the use of numbers. Financial management can also be used to inform a business owner of why his business is successful, unsuccessful or unchanging.Full Answer >
In order to write a successful 5-year business plan, designing a good tactical plan with an executive summary and good products is necessary. It is also always a good idea to include the management team and the projected financial analysis for each year.Full Answer >
Budget management is the analysis, organization and oversight of costs and expenditures for a business or organization. Managing a budget requires adhering to strict internal protocols on expenditures. A well-managed budget allows for continued smooth operations and growth.Full Answer >