How to Choose a Financial Plan for Your Business Goals and Objectives
Financial planning is a method of determining how your business will afford to achieve its strategic goals and objectives. It’s a step-by-step approach to keeping control of income and expenses, enabling successful money management.
If you own a business developing and using a financial plan will help you to visualise areas where most resources are needed for the business to grow. This plan acts as a guideline to what you’re trying to achieve and helps you manage your business cash flow.
The plan will also describe the activities, resources, tools, and materials that will be needed to achieve these business aims and objectives, and the timeframes involved. See how to choose a financial plan for your business goals and objectives here…
Setting Business Goals
Financial goals for your small business may simply be to reach an acceptable profit margin. This means that the business earns more income than is spent on operating expenses.
Business revenue is classed as earning from sales, interest on investments, and rent from any business properties you may own. Expenses include wages, advertising, interest payments, and materials, to name a few. Creating a realistic budget is key, as is monitoring your progress so that you can see that you are meeting your targets.
You need to have a clear handle on your goals and objectives to formulate your business plan. Imagine the growth of your business over the next few years and what resources will be required. Consider:
- Financing – will that be your own money that you’re continuing to invest or will you need additional funding?
- Employees – how much extra staff will your business need to take on?
- Geographic location – will you have the potential to expand locally, nationally, or globally?
- Management – will that remain with you being in charge or will you delegate an entire range of tasks to others?
- Revenues – what will ongoing annual revenues be and will you expand to sell a larger range of goods and services?
Achieving Financial Goals
You can separate your business goals into three categories – short-term, mid-term, and long-term. This goal-setting process will allow you to decide which goals you want to reach within given times:
These financial goals typically take less than 12 months to achieve and can include paying off a specific debt or buying a new piece of equipment.
More than a year and less than five years is the usual time frame for these financial goals. Examples could be increasing your turnover or relocating to larger premises.
Between five and 10 years is the time normally allocated to long-term financial goals. Although plans may change the goals set should stay the same. It’s often helpful to break down your longer-term targets into a series of smaller steps to ensure ultimate success.
Outsource a Virtual Chief Financial Officer
If you need help with business planning and making it work for your company why not turn to a virtual CFO? A business plan is an essential tool that needs to impress investors, bankers, and other institutions. And it should provide accurate information as to your current financial position, and where you’re going in the next five years, and with what resources.
Outsourcing a virtual CFO will ensure that your business plan is generated by an expert. And will give a clear picture of your business – setting out your goals, and planning your sales, marketing, and financial objectives. All of which will be presented in a highly professional document. This will give you confidence that your business will grow and thrive as you have a guide to continually refer to.