Small and large businesses invest time in creating stable financial plans to ensure they grow and expand within a financial framework. The goal of effective planning is to reach the business’s potential without driving the business into debt or bankruptcy. In addition, having an effective plan helps avoid hindrances and obstacles, while keeping a balanced cash flow during the planning and growth process.
Setting Financial Goals
Financial plans are developed on predetermined goals, rather than just putting funding aside once or twice per month. As a business owner, you must set goals for your business, including financial goals such as having $100,000 in the cash budget and putting funding aside to open a new office within the first two years of business. Use your long-term goals in your business plan to form the financial goals for the plan.
Research and Data Gathering
A successful financial plan is developed on research and factual data. The first step in developing a plan is to research potential options based on the company’s available funds and net worth. Read through the company’s balance sheets, investment statements, bank statements, insurance policies and employee benefit plans. Examine the company’s finances and pinpoint any risks associated with the plans you wish to make for the company. For example, the company may have the goal to expand, but the balance sheet’s negative net worth may present a risk if opening another office.
Making a Plan
Another key factor in having a successful financial plan is creating a schedule, timeline and budget so you can fulfill the goals of your plan. Assume your plan starts today and set a desired deadline on your goal. Make a reasonable and timely schedule, allowing you to work toward the goal in small steps, such as setting $200 aside to your cash budget on a bimonthly basis.
Implementation and Maintenance
Implement the plan immediately and keep it up on a daily basis. Check your weekly or monthly deadlines to ensure you are meeting them. A successful financial plan allows you to make changes it, such as missing a payment or two due to unforeseen circumstances.