06 Feb How to get the most out of financial planning for your business
Get your financial planning right, and you can ensure the longevity of your business. Decisions are based on sound knowledge and research, and performance maximised through efficiency and clarity of direction.
Get it wrong, and it could spell disaster for your company. Basic financial planning does not need to be a burden on your already limited time and resources, just consider the following tips and you will be well on the road to success.
Know your market and know your goals
It is not uncommon for a business to set financial targets for the year, usually broken down by monthly or quarterly periods. It allows you to have a standard to measure your performance against, gives early warning of underperformance and the ability to mitigate.
The trick is to set realistic goals by understanding your market. Do you have a good understanding of wider trends in your field? Are you prepared for changes in your own business and your customer behaviour? Only by undertaking market research and having a good understanding of your previous performance, and the impact of both micro and macro influencing factors, can you budget and forecast where you will be at the end of the year.
Stay one step ahead of cash flow problems
Recording and managing future cashflow is absolutely essential, and a vital part of monitoring performance. You should know exactly when you have or will receive income, and need to be prepared to cover your expenditure liabilities.
With good financial planning and accountancy, you can also make sure you are prepared for possible issues that can arise. A good bookkeeper can be worth their weight in gold here, meticulously recording cashflow and giving you the data you need to be proactive in your decisions.
Never forget your tax obligations
A good financial plan should also account for paying taxes. Missing a deadline will leave you facing late fees, fines and interest. This can be catastrophic for a small business.
Tax is tricky, it is not hard to get it wrong. Seek VAT advice early from an accountant and they will help you successfully navigate the complex, ever-changing rules and regulations. You can also be reassured you will not pay more than you need to.