Partner Article

The Importance of Bulletproof Financial Planning

Proper financial planning forms the backbone of any successful business. Without it, no company can operate at peak efficiency. A lack of effective financial planning will restrict a business’s profit making potential, and at worst, will cause a leak in finances. It is something that is set up before a business can start operating. While it is not always regarded as a single, conventional document across all businesses, there are generally accepted aspects to it. There are three general categories to planning; the role of financial management, its objectives, and the actual planning cycle.

There are several major steps in implementing a sound financial plan, and they are as follows:

• Analyse and assess the environment the business will operate in– What is the industry like, and how will the business fit in?
• Establish the vision and objectives of the business –What does the business want to do, and how will it grow?
• Identify the elements that are required to reach the objectives –What needs to happen in order to meet the vision and objectives?
• Quantify the required resources– What and how many resources will be needed for the objectives to be met?
• Calculate the costs of all resources- What will be the total cost of all the necessary resources?
• Create a budget using the information –Where will money for resources come from, and how will they be paid for?
• Identify any potential problems or risks –What could go wrong with the business as a whole or this financial plan?

Not only does a comprehensive plan aid in going forward with a business, but it helps to resolve any issues that may arise in the setup process. If there is any confusion in the beginning, then the plan can be referred to.

The plan is also a useful tool in day-to-day decision making. If a business is unsure about how to progress with a decision, it can use the plan to make an informed one. The budget in particular is effective to decide how much money can be spent on new resources or assets.

A key importance when making any kind of financial plan is to ensure that it complies with relevant legislation; tax systems in particular. In some cases, business can easily be over or underpaying, so it is vital that tax is taken into account. Many companies hire an expert to ensure tax documentation is accurate and up to date.

A corporate financial plan is also something that should be updated to make sure that is doing its best for the business. The cost of resources can fluctuate, and as such, out of date financial plans can show inaccurate information. It should always be suitable as a point of reference, and this can only happen if the information contained within is current.

EBC Corporate Financial Planning can help make sure your business is running to the best of its ability. They take a step back and look at how they can maximise your financial success.

This was posted in Bdaily's Members' News section by Amey Bester .