Financial planning in smaller companies;

              Financial Planning in Smaller Companies
By MASON E. NOLAN Principal, Portland Office
Presented before Portland Chapter seminar of the National Association of Accountants, Portland, Oregon — October 1960
MANY people think that smaller businesses have fewer and less dif­ficult
management problems than large companies. They have the impression that management problems vary in direct proportion with the size of the company; that small companies are faced with only a limited number of simple, easily comprehended, routine oper­ating
problems, whereas large companies are constantly struggling with a deluge of complex questions having far-reaching effects and major consequences.
Informed people generally agree that the management problems affecting small companies are of the very same nature and urgency as those affecting large companies. The significant difference is in the availability of skilled specialists to handle each of the various types of problems. The small company has no fewer challenges, but typi­cally
it must meet them with much more limited managerial resources. It is not uncommon to find the top executives in a small company so deeply immersed in day-to-day routine, harassed by petty problems, that they have little time for careful financial planning and the devel­opment
and implementation of much-needed improvement programs.
Financial planning, to my mind, encompasses a broad range of managerial activities; indeed, it is the very essence of management. Included in its scope are:
• Determination of objectives and policies of the company;
• Formulation of long-range plans working toward the company's
objectives, within its policies;
• Formulation of short-term plans to spell out in greater detail
early portions of the long-range plans;
• Development of budgets to express the short-term plans in
financial terms;
• Direction and control of operations toward achievement of the
plans;
• Reappraisal and revision of both long and short-term plans as
conditions change.
378