Financial Counseling Term Paper

Pages: 8 (2484 words)  ·  Bibliography Sources: 7  ·  File: .docx  ·  Level: College Junior  ·  Topic: Business

Financial Counseling


Lee was born on June 23rd, 1950 in a small town called Holmen in Western Wisconsin. He studied at Holmen High School and went on to do his Bachelors in Management at the University of Wisconsin-Eau Claire. From there, he went on to do his Masters at the Ohio State University in Columbus.

He is a well-educated person with a clear focus on what he wants to do. He has always had a business acumen and is good at identifying new potentials and opportunities. He is a highly motivated person who also encourages people around him to excel. He met his wife at the Ohio State University and got married right after his graduation. He has four children and currently lives in Columbus, Ohio.

Career Path

After his graduation from the Ohio State University, he started his career as a consultant for an it company that was involved in offering customized solutions to larger corporations. The first company that he consulted for was IBM and this helped him to gain some valuable experience. He steadily worked his way up and became a highly respected business consultant within a couple of decades. He had the natural ability to assess the current scenario and identify the problems that are likely to come up in the near future. This specific talent gave him an edge over his peers and he was much sought after in the it industry.Buy full Download Microsoft Word File paper
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Term Paper on Financial Counseling Assignment

He worked for 30 years and offered his services to numerous companies located across the length and breadth of the country. His job required a lot of traveling and as he became older, he wanted to settle down in a quiet daily routine. So, he quit his job as a consultant and started his own company called Lee Software Solutions. The main aim of this business was to provide software packages for small and medium-sized companies that are looking to automate some of their inventory, supply chain or HR processes. He takes a personal interest in each of his clients and ensures that the company gets the exact customized software that will enhance its productivity and reduce its costs. He is currently the CEO of this company and is using all his expertise and experience to make this company successful.

Current financial problems

Despite his vast experience in the field of it and consulting, he has little financial knowledge and is stuck with three different problems. Life is becoming difficult for Lee and so he requires a financial counselor who can handle all the three problems for him so that he can continue to focus his attention on the business. He has appointed me as the person who will find solutions to his financial problems.

My first step is to understand the problems in the context of Lee and then work on a solution that addresses each of the problems separately.

Small business financing

The first problem relates to his business, namely Lee Software Solutions. It is a small business that has about thirty full-time employees and five contractors who work on part-time basis as and when needed. The annual turnover of the company is $2 million.

Lee has been observing a trend that requires him to expand his business. Due to the economic recession, many small companies are laying off their existing in-house development team and are instead looking to outsource some of their software needs. They require some updates to their existing software or rarely a new software and for this job, they find it cheaper to ask a smaller company to do it for an hourly charge instead of having a complete development team. Some companies have estimated that they can save more than 50% because they outsource only what they need and they can save on the employment benefits and health care costs of their employees.

Lee wanted to make use of this opportunity by expanding his business and recruiting more people, both full-time and part-time. For this, he required additional funds and borrowed money from a bank at competitive rates. He then began to approach companies for outsourcing and as he was close to getting some work, he realized that all his money was spent and he is currently in a position where he has to borrow more. Lee finds this situation dangerous for his business because the money that he borrowed has not translated into profits for him and now he has to borrow more. The interest can eat into his profits and he wants financial counseling on how to go about this situation.


There is a two-pronged approach to this problem. The first part of the solution is to identify sources of money that will not cost a lot to Lee and the second aspect is to identify how to manage the funds better. For the first part, Lee should look at alternate sources of funding. It can be difficult for Lee to get financing from banks frequently because credit has dried up in these economic conditions. "A survey in April 2010 by the Atlanta branch of the Federal Reserve found that in the previous three months, 40% of small-firm applications for credit had been denied, and many of those who were offered credit either got less than they requested, or refused it because of unattractive terms" (Megan, 2010, p.47). So, the possibility of getting finance is slim and Lee may be forced to look at alternate sources.

One of the best ways is to take money out of personal savings. Since, he is the owner of the company and the profits are directly enjoyed by him, he should consider investing his savings into the business. However, if Lee feels that is too much of a risk or if he is unable to come up with the required amounts of money, then he has to look at some other options.

Another source is through friends and family who may be willing to lend at little or no interest. However, if the business fails, then it can impact relationships. So, its a good idea to have a written agreement on the terms of repayment and the interest. The Small Business Administration (SBA) is a Government organization that works as a guarantor for loans given to small businesses. There are certain rules related to how this money should be used and Lee should be willing to follow these rules, if he wants to borrow through the SBA. (SBA, 2010).

Other than these sources, Lee can also visit the local Office of Development to check their financing options. It greatly varies from city to city and so he has to go in person and check with this department. Venture Capitalists are also a good choice because they are constantly looking for new opportunities and innovators who will make use of these opportunities. So, he can approach one of them to discuss the possibilities of financing. The only downside with venture capitalists is that they would look to be a co-owner of the company and not just a lender. He can evaluate these different options and decide on the source for his capital.

The second part of the strategy is the financial management of the company. Unfortunately, many small businesses are under-capitalized and they do not have to follow the regulations laid down by the governing bodies. This can often result in poor management of finances. More often than not, bankruptcy in small businesses is due to poor management rather than economic factors.

First and foremost, Lee should have a budget for this business and this should be separate from his personal budget. According to Bowman (2008, p.60), "You should have a separate budget for your business and personal finances. You need the latter to determine what amount you need to take out of the business each month to meet your personal expenditures. Your personal budget will include all sources of family income and expenses, and it will determine what your business will generate."

Budget provides a sense of direction and will give better accountability. The actual sales and expenditures should be recorded by Lee and at the end of every month, he should compare the budget with the actual and understand the deviations, if any. This kind of financial discipline will give better control over his finances.

I am going to sit with Lee and help him create his first budget. After that, we will go through the expenses and income and how they should be recorded. At the end of the month, Lee and I will decide where he exceeded the budget so that it can give him a fair idea of financial management.

Corporate Tax problems

Lee got a letter from the IRS stating that he had to pay a sum of $100,000 in taxes for this year. This was shocking to Lee because he felt he did not make that kind of money and this was grossly exaggerated.

On analysis, it was found that Lee did not do a good job of record keeping.… [END OF PREVIEW] . . . READ MORE

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How to Cite "Financial Counseling" Term Paper in a Bibliography:

APA Style

Financial Counseling.  (2010, December 4).  Retrieved September 22, 2020, from

MLA Format

"Financial Counseling."  4 December 2010.  Web.  22 September 2020. <>.

Chicago Style

"Financial Counseling."  December 4, 2010.  Accessed September 22, 2020.