How Important Is it To Have A Financial Plan For Your Small Business?
How important is it for you to have a financial plan for your small business? Financial planning is an essential part of any business as it ensures that you‘re able to deal with changing circumstances and still achieve your long-term business goals.
Your financial plan will help with managing your cash flow, taking into account any seasonal variations. Careful financial planning will enable a cash cushion available for taxes, unexpected expenditures, and allocation of funds to areas of your business that are the most profitable.
See the importance of financial planning for small business owners here…
Financial planning for business owners
A financial plan will help you measure the progress of your business and ensure that adequate steps continue to be taken to achieve your goals. Reviewing and analysing data allows for a business plan that’s regularly updated for a successful operation. A plan showing steady growth in revenue and a rising cash balance can be a great motivator.
Comparing forecasted numbers to actual results provides important information regarding the overall financial efficiency of your business. In creating your financial plan you can use budgets to translate into periods when cash is plentiful and times when cash shortages may happen.
Preparing your financial plan accurately can allow you to make difficult decisions regarding trends that may result in success or strategies that may not have worked. These trends then help you allocate the appropriate funds. As quantifiable targets are set that can be compared to actual results during the financial year decisions can be made that are based on fact.
Your financial plan also helps with your cash flow ensuring that there are no shortages of cash in the long term. A solid plan will be a reminder of all ongoing necessary expenditures to allow your small business to keep on growing. Prioritising areas that need immediate funding won’t cause any issues when financial resources have been conserved.
Insurance for your small business is vital and forms an integral part of a good financial plan. This insurance protects against losses suffered during the course of normal business activities, with different types of business covering different risks. Public liability insurance covers claims made by a member of the public for example and employers liability insurance covers compensation claims from employees.
Financial planning for the future
It’s imperative that focus isn’t placed entirely on the issues that need to be dealt with on a daily basis, but what should be done to grow your business long-term. Your financial plan will allow you to see what expenditures need to be made to keep your business on its growth track, and also to stay one step ahead of any competitors. Look at your financial plan as a guide to continual improvement in the performance of your business.
The right investments can be a constant source of cash flow ongoing to your business so researching and planning to get the best returns is the ideal solution. A wealth management advisor can provide you with a range of planning and investment services, looking at your finances from all angles to identify and act on new opportunities.
Need a certified financial advisor?
Why not consider employing the services of a virtual CFO (Chief Financial Officer)? You’ll get all the help and advice you need in creating a financial plan tailored to suit your business needs. Setting up a financial structure and other processes for financial control and bookkeeping will all be professionally handled on your behalf.
Getting professional assistance with your cash flow forecast will also allow you to measure the performance of your business ongoing and make better decisions relating to your business’s future.