Financial Management and What Students Can Learn From A Startup Simulation Game

Finance issues in business are always a hot topic. The management of a company’s finances is key to its success. 

What Is Finance Management?

Finance management is dealing with and analyzing money and investments for a business to help make positive business decisions. 

Financial management involves a strategic plan. This plan helps a business to earn and spend money, and to ultimately, be successful. 

Financial managers use ratios, debts and equities as a means of reaching the company’s investment goals. There are many moving parts, and the management of finances is usually handled by the top managers in a company.

Examples of financial management best practices:

  • Setting company financial goals
  • Analyzing data in areas of finance
  • Managing the company portfolio
  • Distributing dividends
  • Borrowing money
  • Raising and allocating capital
  • Budgeting for the company
  • Monitoring foreign currency
  • Following product cycles

So what is the complete purpose of Financial management? 

The purpose of financial management is to properly analyze a company’s finances – this includes examining the company investments and existing wealth – in order to make important decisions for the long and short term good of the company.

Why Finance Management Is Important

Why is this important? 

What is the goal of financial management?

It’s really quite simple: a strong company has strong finances. They are the very foundation of a company. 

Financial management data aids a financial manager in making the right decisions for a company. These decisions help to increase the profitability and to raise the overall value of the company for shareholders. 

The end goal is to improve the company’s financial management functions while creating present and future financial stability.

Here are some goals of business finance and management:

  • Solid cash flow: Managing cash flow problems and solutions may seem like a short term goal, but this important task keeps constant money flow available for the much needed daily expenses of a company. This includes purchasing the needed materials for production of products. It also includes regular and timely payment of utilities  – and salaries. This is truly important as it affects the company’s reputation and its credit rating. No one wants problems with cash flow.
  • Maximizing the profit: Profit maximization is one of the main objectives for strong financial management. This can be done by increasing product prices, building a new customer base, increasing sales to the existing customers, etc.This may involve offering special sales and promotions, creating new products, and locating new untapped markets.
  • Building wealth: Stakeholders want to grow company wealth and value in an effective and safe way. A solid financial plan contributes significantly to maximizing the growth.
  • Financial safety: Financial safety involves avoiding bankruptcy or closure. For a company to stay in existence, the managers and employees need to continue to have safe jobs. So, management makes sure that the company products or services continue to effectively reach the chosen markets.
  • Capital raising: Another huge goal is raising capital for the company. This includes keeping capital expenses under control, to help increase profits.
  • Estimating needs: A financial manager must create an estimate  (based on available data) of what money may be needed for operating in the immediate and long term.

Finance Management In Simulations

In simulations, students receive an invaluable opportunity to learn how the decisions about investments and finance can impact a company in a life-like way. Understanding finance takes time, and simulations give time. 

Students playing Startup Wars Simulations can gain experience in the important aspects of financial management. It’s completely simulated, and a consequence-free environment.

Financial lessons in simulations can include: 

  • Business management basics
  • Risk assessments
  • Accounting strategy
  • Investments of employees
  • Online banking simulation for students
  • Tax simulation for students
  • Cash flow management, and more

Startup Wars games truly resemble real-life financial business experiences. 

However, any mistakes a student might make in a simulation game are risk-free, and they have no damaging repercussions. The game gives you invaluable hands-on experience in the tumultuous world of finance -worth years out in the field. 

Common Challenges

There are many financial challenges that a young entrepreneur may face when building a startup. Financial manager skills are not born overnight

Some of these common challenges of finance management include:

  • Accurately keeping track of records
  • Properly reporting finances on time
  • Facing limited cash flow
  • Facing limited revenue
  • Bankruptcy

These very real challenges are why Startup simulation games are so invaluable. 

Simulations create a very powerful world that has an element of chance. No one can really predict how a financial strategy may or may not go. A student may choose to follow a bold investment choice with a heavy strategy in mind, or, they may try to set their prices lower than the market average to gain success. 

Simulations are a testing ground to discovering strategies a student enjoys. 

Just like in the real business world, the only real strategy for financial management is to be as prepared as possible for common challenges that could arise. 

Business financial literacy and skill (and confidence) develops through this finance simulation training. 

Simulation helps a student to be prepared for unexpected outcomes. Being able to pivot when necessary is a tool a student can carry with them as a future entrepreneur.

Financial Management and What Students Can Learn From A Startup Simulation Game

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Charlotte Kane
Charlotte Kane Undergraduate Student, The Ohio State University

Startup Wars allowed me to understand everything that goes into starting a business in 90 days.

Darshita Bajoria
Darshita Bajoria Undergraduate Student, The Ohio State University

Startup Wars is an interactive way to learn and hone entrepreneurial skills while being a no-risk outlet. Great tool for those pursuing entrepreneurship.