Business Financial Planning. Learn how to start from scratch and ensure the financial success of your company.
After all, taking care of business finances from the very beginning can be one of the determining points in defining business success.
What we will see in this article
What is financial planning for business?
It is basically the document where the corporate guidelines are defined. Thus, it facilitates faster and more assertive decision making. Therefore, it is fundamental to indicate the financial health of the company.
How important is it to do corporate financial planning?
This plan makes it possible to visualize the financial viability of the project in terms of budget. Over time, it becomes an important documentary source for making future projections and accounting analyses.
The financial planning of the business must be strategic and then makes it possible to visualize the company’s current situation and understand how its cash flow works.
Through it, it is also possible to design an assertive action plan, in order to achieve the goals that the company wants to achieve.
Diagnosis of the current situation
The first step in starting this financial planning from scratch is to understand where your business stands in the market. Thus, it will enable you to observe the company’s strengths and weaknesses, as well as identify its main opportunities and threats.
This way, you can already draw up your strategic planning in order to launch your product or service on the market, for good results in the short term.
Mapping expenses and revenues
It is essential from the start to have a spreadsheet to control business financial planning. This is because this document will contain all the records of expenses and what working capital is needed for the business to operate autonomously.
It is essential to record all fixed and variable expenses. In addition, you can identify future investments that you want to make in the company, so that you already have the revenues to achieve your goals.
Documenting all incoming revenues, both incoming and foreseeable, is also important to get a picture of the whole and to understand the dynamics of the cash flow. The more detailed your mapping is, the easier it is to visualize the health and financial planning of the business from the beginning.
Define your goals and objectives
After mapping your income and expenses, you should think about what your goals are. It is crucial to define short-term as well as medium- and long-term goals because this helps you create a broader perspective and achieve a path to grow the company.
It is crucial, however, to make realistic goals, so that you do not seek too great a challenge at the very beginning. Take it easy.
Project different financial scenarios
Often external factors can directly affect some business segments. Therefore, it is important from the beginning to open up the vision and draw alternative scenarios.
Work, then, with both positive financial scenarios and economic crisis scenarios, to already prepare for possible adversities.
Define your action plan
After all these steps have been taken, you must document what actions will be necessary to achieve each of the goals you have set. In this case it is about actions in the very practical sense, in terms of what needs to be done.
Ideally, you should create a realistic schedule of tasks in order to fulfill the action plan. Here it will be essential to delegate tasks (if you can count on a team) and also to stipulate how each of them will be measured. These protocols make it easier to make strategy changes, should they be necessary.
An underestimated step by many beginning entrepreneurs is pricing. This is because setting the price you charge for your products or services cannot be done based on intuition alone.
It is elementary to conduct market and competition research, measure all the costs involved in production, separate out the amount of pro-labour, the variable expenses, and the profit expectation. By prioritizing this, you ensure that your company has a sustainable structure from the start.
Controls and records
Make a habit of doing the financial control and planning of the business, so that it is constant and really integrates into the business routine. There is no point in dedicating yourself to it only once a month or every six months.
Ideally, the financial control spreadsheet should be updated daily as all financial movements occur. Gradually, this task will already be integrated within the work dynamics and will certainly save a lot of future stress.
Make improvements whenever you think it is necessary
Financial planning monitoring allows the company to have a better view of its present, and thus to plan its future in a more organized way. Therefore, it should not be a static document.
It is important that you make the necessary adjustments and improvements whenever you see fit, in terms of matching revenues and expenses. Remember that maintaining the financial health of the business is one of the main factors for success.