It’s no secret that cash is
what makes business world go ‘round. This means optimizing cash consumption is
one of the most important tasks your business will have to deal with. Still,
the numbers game is not something you can easily get a hold of. Recent studies
have shown that 28% of businesses go under due to some financial mistakes that
could have easily been avoided. In order for this not to happen to you, you
should make sure your startup has a financial plan. Here are 5 aspects of
businesses that can benefit from financial planning.
Progress Measuring
When running a small
business, there are numerous challenges you as a business owner have to face.
This is especially the case during the first few months of running your
business. One of these is measuring the company’s progress. Knowing that your
business has progressed or taking a look at rising cash balance can be great
motivation for working even harder. Therefore, the financial plan you make sure
that your company is going to turn out to be successful.
Spotting Trends
As a business owner, you
have to make a large number of decisions every month which can even lead to you
forgetting which of them worked for you and which of them turned out to be a
real failure. When preparing a financial plan, you have to set quantifiable
targets you will later be able to compare to the actual results you get during
the year. For example, you can see whether the money you invested in marketing
led to a jump in your sales. This means trends in the individual sales will
help you know where to invest in the future.
Managing Cash
No matter what line of
business you deal in, chances are there are some seasonal variations in your
revenue. When building a financial plan, it is crucial that you take these
seasonal variations into account in order to forecast future expenditures.
Also, having a well-structured financial plan can also help you prepare a cash
cushion that will help you sleep better at night. If you have some money on the
side, you will also be able to invest in some opportunities that might
potentially come up.
Having a Long-Term Goal
Another important thing
about financial plan is that it helps you prepare
long-term goals for your business. A large number of business
owners tends to be preoccupied with some short-term goals that they simply that
have time and energy to think about long-term plan for their businesses. Having
a financial plan will help you see which aspects of business you have to invest
further if you want your business to keep growing properly. In fact, having a
good financial plan is crucial for maintaining continual improvement in your
business.
Prioritizing Expenditures
Having a good financial plan
will also help you identify the most important expenditures of your company.
This means you will know exactly which expenditures have a positive effect on
your business’ market penetration, productivity and effectivity. Another thing
you will know is also which expenditures are not that important for your
business and can be postponed until there’s more money available. Therefore, it
is very important that you turn to a good accountant whenever an expenditure is
proposed. If you are looking for a tax accountant in Sydney,
there are local companies you can turn to.
Having all of this in mind,
it is obvious that financial planning can be beneficial for every business.
Make sure you contact an accountant and start preparing the financial plan for
your business as soon as possible.
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