If you want your business to succeed, you must understand financial planning. It forms the core of your business development, as it helps you to look into the future and make sense of the present.
Why Should A Business Have A Financial Plan?
First, you should know that your plan is always wrong. But as the famous quote by Dr Gramme Edwards says,“It’s not the plan that’s important, it’s the planning.”[pullquote]
“It’s not the plan that’s important, it’s the planning.”
[/pullquote] Financial planning will ensure you are better prepared for the times when the plan doesn’t go according to plan.
There are a number of benefits of financial planning.
The first major benefit is the validation of the business plan. With proper planning, you are able to confirm the objectives can be achieved in terms of financial gain and spending. This can be especially crucial for assuring investors of the viability and therefore getting them on board with your business. In essence, your business can validate whether the business assumptions are met in real life and decide whether to continue or discontinue with the current strategy.
Furthermore, financial planning allows the establishment of a workable budget. It outlines the spending requirements needed for achieving specific objectives and measures the income requirements.
More than 1 million people are estimated to have used loans as a short-term solution to make ends meet, and the total amount of loans lent is thought to be around £1.2 billion and growing.
Finally, a major benefit of financial planning is how it provides better financial control. You are more in control as you are more aware of the costs associated with running the business and succeeding. For example, financial planning means you are more attentive to the business’ tax burden. Since you are able to work ahead and estimate expenses and income, you can prepare the business for taxes. Furthermore, you can manage the cash flow and prepare for future needs in advance. Overall, it also guarantees better debt management, as you are aware of the interest rates and other associated costs. This can allow accelerated debt repayment and boost the business finances further.
Financial Planning Tutorial
In this guide, we’ll explain in detail what financial planning is about and the benefits it brings to your business. We’ll look at the core elements of a financial plan and the steps it takes to cover all the bases. We’ve even included example spreadsheets to help you plan your finances.
Read the: Advanced, Financial Planning Tutorial