A financial plan is one of the most important things a small business should have. Many small businesses jump in and work week by week or month by month, but having a set financial plan and an idea of how your finances are going to look is the best way to give you confidence your business is performing. 

Think of a financial plan as a road map, a guideline, a reminder of what your goals are – what you are trying to achieve in the short-term and the long-term. It gives you an insight into your upcoming and potential costs, and looks for ways to manage them.

A financial plan is also vital to guiding day-to-day decision making within the business. Knowing where your forecast numbers lie in comparison to your actual results gives you important information on the overall financial health and efficiency of your business, and no business is too small to have a financial plan in place. 

Your financial plan should outline:

Cash management and budgets

This is looking at the shorter term, and working with the ebbs and flows of monthly or seasonal variations in revenues; periods when cash is plentiful and times when cash shortages occur.

Long-Range View

Expanding your view and looking at the long-range financial plan is crucial to expanding and growing your business. Think of your financial plan as a blueprint that allows you, as a business owner, to better see what expenditures need to be made to keep the company on a growth track and to stay ahead of competitors.

Spotting Trends

This helps you as a business owner see how your budget and spending worked for your business. For example, having a financial plan can spot whether an increase in advertising spending led to the hoped-for jump in sales. 

Measuring Progress

Especially in the early stages of their ventures, small business owners work long hours and deal with numerous challenges. It can be difficult to tell whether progress is being made or whether the business is in a slow start-up or growth phase. Charting your finances and growth can be just the confidence boost you need as a business owner, or be an eye opening view of where you need to make changes.

Prioritising Expenditure

Knowing how your finances are looking helps you better allocate where you need to inject more cash or conserve your financial resources. It can also help small business owners identify the most important expenditures – those that bring about immediate improvements in productivity, efficiency, or market penetration, versus those that can be postponed until cash is more plentiful.

If you're looking for help with your financial plan, get in touch. I can help on a contractual or more permanent engagement to help you optimise your business finances.