Financial management is all about how small businesses handle their money to stay afloat, grow, and succeed. It involves planning, organising, and keeping control of the company’s financial activities. At its core, it’s really just the science of managing money—and getting it right can make all the difference. With the right approach, small business owners gain the confidence to make better decisions based on clear, financial thinking.

One major part of financial management is making sure your limited resources are used wisely. This means planning carefully to stay profitable and stable, especially when money is tight. It’s also about keeping a close eye on how money moves in and out of the business—covering everything from credit and banking to investments and debts. This helps you make sure there’s always enough cash available when you need it.

Financial management plays a big role in both the big-picture strategy and day-to-day running of your business. It helps you respond to opportunities, manage risks, and stay in control of your cash flow so you can stay profitable. It also includes three main activities: planning, control, and decision-making. Planning means figuring out how much money you need and making sure it’s available when required. Control is about checking whether you’re spending wisely and staying on track. And decision-making is where you choose where to get your money from and how to use it in the smartest way possible.

For many small businesses, especially in South Africa, the focus is less on complicated financial theories and more on the basics—like keeping a healthy cash flow and managing day-to-day finances. Research shows that small businesses here benefit more from paying attention to working capital and short-term profitability than from advanced financial analysis or strategic forecasting.

This focus is especially important in South Africa, where small businesses face one of the highest failure rates in the world—somewhere between 70% and 90%. A big reason for this is the lack of proper financial management skills. That’s why learning the basics of financial management and applying them well is often the difference between success and failure for small business owners.