Example Of Essay On Step Two: Implementing The Investment Strategy
Personal Action Plan
Personal Action Plan: Using Accounting Knowledge and Financial Data in Investment
Before one can invest, it is significant that they strategize for the same by formulating an action plan. Strategizing involves developing a plan of how one will conduct the investment. Normally, strategizing involves considering all the possible variables (whether positive or negative) in the investment area. By the use of financial data that relates to the area of investment, one can adequately prepare for the investment. Financial information includes data from existing players in the investment area and other data such as market trends and product prices. This information helps one establish variables in both the macro and microenvironments of the investment area (Robert & Michael, 2010). Accounting knowledge helps in crafting the best fiscal strategy as one knows how to manage the financial investments effectively. Proper management of finances is the key responsibility of all firms. Thus, when strategizing, one always considers management of business finances once the investment becomes operational. Secondly, accounting knowledge is significant in strategizing on mechanisms of funds allotment to various aspects of investment. In essence, accounting knowledge and financial data will help in budgeting for the investment. Effective budgets eliminate chances of wasting funds and misappropriation of funds (Robert & Michael, 2010). Therefore, it is significant that; during the strategizing, one uses accounting knowledge and financial data effectively to come up with the best line of action.
After formulating a strategy, one can now implement it as planned. Implementation involves executing the plans outlined in the strategy formulation phase. It is where the actual finances are now being put to use. With a proper budget, one can ensure that the investment implementation phase is a success. Accounting knowledge helps individuals manage the funds being used to execute the plans effectively. For instance, one would use inventories to determine purchases and expenditures. It helps determine the projected purchases for the implementation phase (Robert & Michael, 2010). After setting up the investment, of course, there will be the need to manage and run the business operations. This is where daily business transactions are recorded as per the operations of the business. With accounting knowledge, the recording of these transactions is done effectively. Financial data should always be handled accurately. Errors in financial data might cost a business a great deal. Thus, it is significant that one uses accounting knowledge effectively to handle financial data.
Step Three: Follow-Up Activity
Notably, after implementation it is always fundamental that one keeps a track record of the business operations. This is through follow-up activities aimed at improving business and correcting potential errors that might exist in the business. For instance, one could use statements of financial position to determine the net worth of a business; whether it is operating in deficits or profits. This also includes coming up with trade/profit statements that determine the margins upon which a firm is operating. Annual financial reports are also a good way of capturing how the business is conducting its operations (Robert & Michael, 2010). The main aim of business is to make profits, thus, it is fundamental that a business person uses accounting knowledge extensively to establish whether the business is making profits, is in stagnation or is constantly making losses. By using tools such as statements of financial position and annual financial reports, a track record of the business operations is maintained resulting in proper control of anything that happens in the business.
Robert, G. E. & Michael, P. K., (2010). One Report: Integrated Reporting for a Sustainable Strategy, John Wiley & Sons