What is the primary purpose of financial management in a small business?

The primary purpose of financial management in a small business is to ensure that the organization's resources are sufficient to meet its financial obligations. This involves carefully planning and monitoring the business's financial activities, including budgeting, forecasting, and managing cash flow. Adequate financial management helps a business maintain solvency, meet its liabilities, invest in growth opportunities, and navigate economic uncertainties. By focusing on financial stability and resource allocation, small businesses can sustain operations and achieve long-term success.

In contrast, while managing employee relations and developing marketing strategies are indeed important aspects of running a successful business, they are not central to the financial management function. Similarly, although minimizing operational risks is a significant concern in business operations, it falls under broader risk management rather than the specific domain of financial management. Ultimately, the financial aspect is fundamental as it underpins the viability and sustainability of the business itself.