What are the Best Tips for Business Financial Planning?

Keith Koons

In tough economic times, the most successful companies are normally the ones with the soundest business financial planning techniques. Although corporations are founded on commodities and service, it is the decision process involving where to spend money that ultimately determines long-term growth. Businesses that attempt to seize their respective markets too quickly or ones that simply accept their current market share are examples of poor business financial planning, because every decision should be based off of revenue and cash flow.

Businessman giving a thumbs-up
Businessman giving a thumbs-up

Business financial planning is normally something that owners of a company will decide well before the business' inception, often to meet one of the requirements inside a small business administration (SBA) application. This projection of future income should include both fixed and variable monthly costs, the expected market share, potential client bases, and many other figures that would indicate how profitable the company would be once it is up and running. With this type of information, a business owner can effectively plan for things like the number of employees the company will require, the amount of inventory levels needed, and how much marketing will be required to attract new customers, all of which is the essence of good business financial planning. Failure to do so wastes both money and manpower, which normally leads to several missed opportunities.

Unforeseen variables will often change the way that a company does business, so the business financial planning must change as well. For example, a company may drastically exceed a short-term projection from a successful marketing campaign, and the extra revenue produced could easily appear as pure profit. Growth invokes several other factors that may not have been expected, however, and there may be pressing concerns to expand warehouse capacity, create new delivery methods, expand the sales force, or several other key components. Each of these decisions should be financially justified on paper before being put in motion, which is why business financial planning should be incorporated in every single decision that a company makes.

Other sound concepts of business financial planning could be applied to marketing, expansion, investments, and many other fields. Each area of improvement may be vital to the company in order to remain competitive, but if it is not monetarily feasible, then adjustments have to be made in order to make the concept possible. Business financial planning is literally the heartbeat of any business and it should never be taken for granted.

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