Business financial planning is one of the tools no business can dispense with its desire to continue in the market and expand. The job of planning finances becomes particularly tough, however, for small entrepreneurs; they spend a lot of time on the most mundane tasks-the day-to-day corporate operational affairs, paying least attention to keeping control over cash inflow-outflow into/out of the firm’s cash flows.
This is a very common habit of many entrepreneurs, yet it brings great losses to any business, irrespective of its size. Financial planning, by contrast, usually generates a series of advantages for companies and influences every single task done within the business environment.
Thinking about helping you keep your business finances organized, we have prepared a complete guide that will help you define goals for your company and maintain efficient business financial planning.
Continue reading and find out how to control your company’s income and expenses and keep your business on track for growth!
How to make efficient business financial planning?
Contrary to what many people believe, creating an efficient business financial plan is not rocket science. To perform this task, the administrator simply needs to follow some specific steps and dedicate themselves to maintaining control over their company’s finances.
Learn below the steps you should follow to start building a good financial plan for your business! Check it out:
1- Analyze the current situation of the business
It is important to understand the current state of your business to come up with an effective business financial plan. As such, understanding your situation is the first step towards having control over your business finances.
The balance sheet is central to this exercise. List down the assets of the business, that is, the products that the company possesses, such as cash on hand, machinery, equipment, goods in stock, etc., and the liabilities of the business, that is, the debts in-built in the company, like rent, financing, etc. Then, assess the company’s financial situation.
This balance sheet is essential for financial planning to yield results. This is because, with the financial balance sheet in hand, you have access to a broader view of the business’s current financial situation – thus allowing the next steps to be planned according to the company’s current situation and conditions.
2- Record the flow of money
All businesses require the owner to record everything that comes into and goes out of the cash flow of the company. Unluckily, not all business owners are accustomed to recording every inflow and outflow of money – and that is one of the causes of huge issues later on.
Therefore, record and track every account payable, accounts receivable, taxes, debts, or any other cash inflows or outflows of the company cash register. Never miss keeping watch on the cash balance available at hand.
3- Make projections for the future
The next step is to plan. Make a habit of making projections for the future of your company, setting goals and targets to be achieved. After all, every entrepreneur wants to see their business grow over time, right?
Try to make realistic projections that are compatible with your company’s current situation, but don’t let optimism go by the wayside. Set goals, share them with your employees, and try to motivate them to achieve them, together with you!
When planning, however, don’t forget to pay attention to seasonality and other issues that, in practice, can result in changes in revenue throughout the year. Don’t forget that your main goal is to maintain good business financial planning throughout the year, so you need to pay attention to every detail.
4- Pay attention to the numbers
The fourth step is to put the numbers related to your business on the agenda. At this point, you need to consider and calculate the correct price for the products and services offered by your company – respecting the cost margins, expenses and estimated profit, reducing costs whenever possible and preparing a budget that allows you to always keep your accounts in order.
5- Put your financial planning into practice!
Once you have completed the four steps to building an efficient business financial plan, it is time to put them into practice. Try to stick to the schedule and budget you have set and don’t forget to manage your business’ finances month by month.
With dedication and focus, you can implement new habits in your daily life and in the routine of your entire team and maintain a well-organized financial plan aligned with the reality of your company, increasing the chances of growth of your business in the short, medium and long term!
