By this time of year, most businesses have developed their marketing and sales plans for the following year but few take the time to create a financial plan. By developing a financial roadmap for your business, you can have better control of your month-to-month financial status and can effectively plan for expenditures in the future. Here are tips to help you create a strategic financial plan before the end of 2014.
- Evaluate your current financial status.
Whether you have a good year or a bad year now is the time to evaluate your current financial status. Take particular note of your customers that pay on time versus those that are slow to pay. It may be time to have a conversation with your slow paying customers and encourage a more routine and prompt payment.
When considering your financial status it is also essential to take into account your goals for the future. Do you envision expansion of your business during 2015 that will require outlays of cash? If so, it is important to start budgeting for that now. An accountant can help you to find opportunities to streamline costs and be efficient in your taxes, both of which can help you gather the money you need to expand.
- Analyze operational costs.
Operational costs need to include real estate, equipment, salaries, bonuses, health benefits, office supplies and whatever professional associations you belong to. For a complete picture of your financial status, take a careful look at the detailed expenditures you and your staff spends each month. What can be cut? What should be increased? Do you need to bring in more customers or would you be better downsizing your customer base and offering new services? Would you benefit from outsourcing functions, like payroll services? These are just some of the questions to ask you when planning for 2015.
- Analyze projected sales and revenue.
If you have already completed your projections for 2015, take a step back and look again. Often it is best to project with three separate contingencies – best case, worse case and sales that project with the previous year. If you have a “best case” year and your revenue exceeds your goal, have a plan on how to reinvest the money. If you have a “worst case” scenario year, plan now how you will handle the shortfall and keep your business alive. Forecasting for downturns and growth is vital; it makes sure you aren’t taken off guard, and you are prepared for all situations that arise.
- Set financial goals.
When setting your goals for 2015, it is important to take into account your current financial situation, your projected revenue and expenses. Be sure to divide out your goals to include employee raises and bonuses, increases in employee benefit costs, increasing business financial reserves, investments for equipment or materials and of course, your compensation. Many business owners get so wrapped up in taking care of their business and their employees, that they forget to take care of themselves.
Take the time to develop a strategic financial plan for your business. Chances are, you have done a lot of the work already and just need to sit down and look at all the pieces through the eyes of an analyst.
