Whether operating as a small, independent start-up, or as part of a huge, multinational corporation, the importance of effective financial planning cannot be overstated. Knowing exactly what the process involves and why it’s so important is therefore crucial in securing your business’ economic future. With that in mind, the following beginner’s guide will hopefully make the task feel a little less daunting overall, and help set you off on the right path.
What is financial planning?
Put simply, a financial plan lays out your current financial situation in relation to your short and long-term goals. This takes into account both internal factors (like assets and available funds) and external factors (like industry trends and the state of the economy).
The intention of a good financial plan is to establish the variables that may prove obstacles on your route to success, making it considerably easier to safeguard your business as and when difficulties arise by putting contingencies in place that will help you see continued growth.
Why is it important?
Having a clear end goal, and being able to anticipate future problems en route to it, will help you to budget and manage your cash flow in the most effective way; consolidating important areas of trade, investing internally when appropriate, securing additional funds ahead of time if necessary, and suchlike.
A comprehensive, up-to-date financial plan also helps to attach a reliable monetary value to your business. This can significantly speed up the processes of applying for funding, attracting the interest of investors, and appealing to potential buyers should you be putting together an exit strategy.
Is there help available?
Absolutely! No one is expected to be an expert on every aspect of business when they’re starting out, and with something as important as managing your finances, acknowledging you need help is the smartest thing you can do. Accessible, jargon-free guides like the one put together by Brookson One walk you through every step of the process, and outline the kind of help that is available from specialist accountants and financial experts.
Is it a one-time thing?
The factors involved in formulating a financial plan (profit and loss, economic growth, interest rates, etc.) are constantly changing. As such, a financial plan must also remain open to review at all times, evolving to reflect both current global circumstances and personalised goals. But don’t let that panic you! Once you’ve drawn up your first plan, it will serve as a solid framework to continually build from, highlighting once again why the formulation of a strong plan in the first instance is so important.
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