It goes without saying that you want your business to grow, and that is not something that should be left to chance. The point is to create growth, and for that, you have to plan ahead. Financial planning is a must for any business who wants to boost their chances at success. We are here to guide you through the steps of financial planning to ensure business growth. 

The Importance of Financial Planning for Business Growth

Having a well-thought-out financial plan for your business is one of the most important things you can do to set yourself up for success. It is only natural that most of your attention will be focused on your day-to-day business and growth strategies. However, you really cannot afford to neglect your financial planning, especially if you want to direct your business toward maximum growth. If the time comes to pitch to potential investors or seek funding from a financial institution, you may not even get a meeting if you don’t have a financial plan. We are not suggesting that every business owner needs to be a finance expert – far from it. Just be sure to work with a financial planner or high-net-worth wealth management expert to help you create a detailed, realistic and far-reaching financial plan.

Does Your Business Need Financial Planning?

If you are wondering whether your business is an exception to the rule we have suggested above, rest assured, it is not. No business, regardless of what sector it is in, or the scale of its operations, should be without a financial plan. A comprehensive business finance plan will help you pin down your business goals and then track your progress against that plan as the year progresses. You can plan ahead for both upturns and downturns, and make your money work for you. You can identify the right times to spend on expansion, or maintain things as they are. 

Benefits of Financial Planning for Your Business

A financial plan is essential for your business if you want to realize benefits such as these:

  • Increased profits: Financial planning is one way to boost your profits. In fact, it is essential if you are looking to optimize profits. With thorough financial planning, you can plot a decisive course of action that aligns with your business goals. In so doing, you can develop more productive and efficient actions and methods that are directed toward the maximization of profit. You can put specific benchmarks and key performance indicators in place, and establish ways to measure them and correct course, if necessary. All of this enables you to take control of your profits, rather than leaving them to the mercies of the markets and economic cycles.
  • Get a detailed picture of your financial situation. Any financial plan starts with a realistic, detailed picture of where your business’s finances currently stand. A financial plan is the best way to get that vital snapshot in the highest possible resolution. You can then lay out a definitive roadmap of where you plan to take the business in the next 12 months. The insight and foresight you get from this financial picture informs your budgeting and management strategies.
  • Give yourself the ability to develop and commit to financial goals. A financial plan turns your vision into measurable goals. You can lay out short-term and long-term investments, plan for capital expenditure and expansion. You can look ahead to periods of market volatility or make contingency provisions for unplanned expenses. With a plan in place, you can prepare your business to take advantage of growth opportunities, as well as taking action to minimize losses. 

Key Points to Include in Your Financial Plan for Business

Although the specifics will differ from company to company, every business financial plan should include the following essential details:

  • Current income: How much money is currently coming in every month?
  • Fixed operating costs: What are you spending on constant costs such as rent and utilities?
  • Monthly expenses: Material, salaries, marketing, etc.
  • Cash flow projections – short and long term.
  • Production costs: What does it cost to produce your products/ services?
  • Total profit/ loss
  • Actual operating income
  • Income projections
  • Business ratios – profit vs. loss, cash flow, income vs, expenditure, balance sheet analysis
  • Personnel plan
  • Investment plans
  • Financing plans and contingencies

With these essentials in place, you can then begin plotting and projecting your future growth, including how you would like these numbers to change in the near and distant future.

Let Momentum Financial help you with financial planning for business. Contact us today to begin working with a wealth advisor who can help you create a detailed plan for your company’s financial growth.