Financial planning for securing our personal futures is a must-do for all of us. If you’re an entrepreneur, financial planning for your business is just as important. So much so, that October is designated as National Financial Planning Month, and October 5-9, 2015, marks the Financial Planning Association’s® (FPA’s®) 14th annual Financial Planning Week®!
To celebrate, many local FPA local chapters are planning events. Head over to this list of chapters, find one near you and see if anything is planned that would help you out.
Where your business is concerned, constructing a financial plan is a valuable exercise for any business owner. It’s essential to the day-to-day decision making of the business, even at a one-person company. Here are some ways having a business financial plan can keep you on top of your game.
- Money Management
Every business has periods when cash is either plentiful or scarce. A financial plan takes these cycles into account, and keeps a tight rein on expenditures during the forecast low periods. A financial plan creates a “cash cushion” that allows you to take advantage of opportunities year-round, such as the chance to purchase inventory from a supplier at temporarily reduced prices.
- Long-Range Goals
In business, putting out fires on a daily basis is the name of the game. But that comes at a hefty price, especially if you’re not spending enough time planning what needs to be done to grow the business long-term. The financial plan helps you determine what expenditures need to be made to keep the company on a growth track and to stay ahead of competitors.
- Trend Setting
At the end of the month, do you easily recognize if the decisions you made resulted in success or failure? Enter the financial plan, which sets measurable targets that can be compared to actual results during the year. Did your increase in advertising lead to the hoped-for jump in sales? Trends in the sales of products and services help make decisions about how to allocate marketing dollars.
- Prioritize Expenses
Conserving financial resources in your small business is critical to your success. The financial planning process identifies the most important expenditures, and allows you to postpone non-essential ones until cash is more plentiful. Even the largest corporations go through this prioritization process, comparing the cost to the benefit of proposed expenditures.
- Measure Progress
Especially during the business’ infancy, small business owners work long hours and deal with a many challenges. At best, it’s difficult to tell whether you’re making progress or spinning your wheels. Seeing actual results provides a blueprint for the future. The financial plan helps you clearly see whether the business is, or is not, on its way to being a success.
It seems that every week another story appears in the media that small business owners are unprepared for retirement. This would be the ideal time to do some serious planning, get organized and assure your future and the future of your family.