It is important to stay on top of your business financial performance. Creating a financial plan will make sure you are prepared for your financial future and always have a good understanding of your cash flow. But how can you create an effective and accurate financial plan?
Roger Hatherall & Co work throughout Bath and the surrounding areas. We work closely with all businesses to create a financial plan perfect for your needs.
Know Your Outgoings
Shockingly, many businesses don t actually realise where their money is going within the business. It is essential for all business owners to know every single outgoing and keep track of all transactions. Evaluating your outgoings will help you understand where you are overspending and create an effective budget to put in place for every area of your business.
As well as reducing spend throughout your business, it will also help you identify what products and parts of your business make the largest profit. Reducing the outgoings where you make smaller profits will help your business flourish. This will allow you to invest more into your most successful areas. By creating a financial plan and evaluating all your outgoings, this process becomes much easier.
Begin Saving For Growth
Saving can be very difficult, especially if you have a large number of outgoings every month. However, saving is integral for your business to plan for future growth and make sure that in 10 years time, the business is still managed and running effectively. From all profit your business receives, you should try to save for future investment, rather than wasting it on other outgoings.
Your financial plan should always include the money you will be saving each month. If you do not have any money available to save, you should look at your outgoings and consider what spend can be reduced and would be better investing back into your business. Once enough money is saved, you are fully prepared for future growth and any problems that may occur.
Track & Review Your Plan
Your financial plan will improve financial performance and allow you to manage your finances in much more detail. However, errors can occur and that doesn t mean you should simply give up on your financial plan.
You should keep track of your financial plan at all times. By planning and forecasting your future finances, you must set realistic targets and expectations for your finances. If your plan is not so accurate, continue to track and review the plan, making change where necessary so you have the best possible knowledge of your financial performance and you have planned correctly for future finances.