Welcome number lovers, business newbies, and those looking to learn more about one of business management’s most important elements.
Whether it’s your first time contemplating a plan or you feel your finances have gotten away on you, it’s time to take back the reigns and manage your income and expenses the right way.
A business needs to be profitable for it to be worth the effort, right? Well what better way is there to ensure your cash flow, tax obligations and budget structure are all kept in the black?
Let’s look at what a financial plan actually is, popular reasons why people opt not to have one, and how you’re operating behind the eight-ball by not recognising its benefits.
What is Financial Planning?
Financial planning is the often-overcomplicated task of deciding how to reach a business's goals through diving into its finances. Weighing up the financially good, the bad and the ugly of a business can present you with plenty of eye-opening information.
It can identify any risks or issues and detail how to improve the financial condition of your business. Strategising can also be broken up into smaller tasks, making goals feel more realistic and attainable. This generally means getting past the initial phases requires consulting a financial planner.
Not only will they help you understand your current financial status, but also assist third parties with making better-informed decisions on why they might consider investing or lending to your business.
Why Some Businesses Shy Away from Developing a Plan
Endless reasons exist for why people don’t reach for the stars, however the time for potential is now. Your business needs a thorough examination, assessing your finances and deciding what's working and what's not. With this information, you can create both short and long-term financial goals.
Here are some of the more common justifications surrounding why small business owners overlook a proper financial plan:
They may not realise the potential for growth in their business.
Thinking big can be frightening – Anxiety and stress can take over when considering new possibilities.
They’ve analysed their business inefficiently without a professional and fail to understand how an expert can improve things.
A lack of confidence to try and build their business beyond rudimentary stages.
Fear of attempting something new and failing.
Does your business need a financial plan?
You’d think that not every business needs a financial plan, but while you might currently be ‘surviving’ without one, is this truly the most you want to see from your ventures? All businesses should be extensively organised, managed, and regularly reassessed to ensure the financial side of things are still headed down the right path.
The days of handing over your books for someone to spend hours looking at numbers while telling you nothing but bad news is over. Getting your finances back on track is no longer this excruciating and it doesn’t have to be thought of as another dent in your wallet.
Instead, think of it as an investment!
It can be a life changing experience that shows you exactly what you’ve been missing. You will be discussing your business with a professional that has your best interests in mind and without the sugar-coating.
They’ll help you navigate your finances which can lead to specified, more concrete goals, growth to new success, and more importantly, healthy finances. A Financial Planner can break down the ultra-complex financial world that you simply can’t afford to misunderstand.
You may not require a long-term relationship with a financial planner, you may just need that extra hand now to point you in the right direction according to your business aspirations.
Financial Planning – The Benefits
Here’s a shortlist of what comes from investing in a financial plan:
You’ll learn to set time frames for obligations and manage them seamlessly (such as tax requirements, monthly bills, etc.)
You’ll understand the importance of setting tangible goals that motivate you to accomplish more, both in business and in your personal life.
Think of your family – Securing your financial future for you and your loved ones is surely a priority. A strong financial plan can help you better decide on insurance policies as well.
You’ll learn to save – Regardless of what’s left over after your outgoings are sorted, a proper plan will allow you to put away at least a small percentage of your income.
No more stressing about where your money is or where it’s going.
No more tediously dealing with numbers and documents you don’t fully comprehend.
You’ll form a professional relationship – Obtaining ongoing advice as your business grows is the best way to keep things from going backwards. You’ll also be working with someone who already knows your financial history and how you operate.
Making more purposeful, deliberate decisions based on facts and professional advice is what a great financial plan boils down to.
Sometimes reading a few motivating articles can be enough to push yourself to start somewhere. By now you can see what exactly a financial plan is, understand its benefits and how introducing one ultimately provides you with the competitive edge and drive we all seek as business operators.
Now start your journey to financial bliss, happy planning!
Looking to learn more about smart money management? Check out our other recent articles including Smart Money Tips for Businesses helping put small businesses back on the right path!
Contact Ironbark Industries Bookkeeping today to discuss our profit first and bookkeeping services, your specific requirements or any other financial management enquiries.