Creating a small business financial plan may seem like a daunting task, but it need not be. By following a few simple steps, you can create a plan that will help your business thrive.
In this article, we will outline 15 steps to creating a robust small business financial plan.
1. Determine your business’s overall financial goal.
What is your business’s ultimate goal? What do you want your business to achieve financially? Defining your goal is the first step in creating a financial plan.
2. Assess your current financial situation.
How much money do you currently have in the bank? How much debt do you have? What are your fixed and variable expenses? Gathering this information will help you determine where your business stands financially and what steps need to be taken to reach your goal says Aron Govil.
3. Draft a budget.
Once you know your current financial situation, you can begin drafting a budget. Your budget should list all of your monthly expenses as well as your income. It is important to be realistic when creating your budget and to make sure your expenses do not exceed your income.
4. Create a cash flow statement.
A cash flow statement will show you how much money is coming in and going out of your business each month. This information is important for determining whether or not you are on track to reach your financial goal.
5. Forecast your revenue and expenses.
Using historical data and industry averages, project how much revenue your business will generate in the next year and then divide that number by 12 to get an estimate of your monthly revenue. Next, forecast your expenses by estimating how much you will spend on things like marketing, rent, and employee salaries.
6. Determine your break-even point.
Your break-even point is the point at which your business will begin to make a profit. To determine your break-even point, divide your total fixed costs by your contribution margin.
7. Set aside money for emergencies.
It is important to have money set aside for unexpected expenses. You should create a budget category for “emergency funds” and try to save at least 3-6 months’ worth of living expenses.
8. Invest in assets that will grow your business.
In order to reach your financial goal, you may need to invest in assets that will help your business grow. This could include things like new equipment or marketing campaigns.
9. Consider crowdfunding.
Crowdfunding can be a great way to raise money for your small business. There are a number of websites that allow you to solicit donations from the public.
10. Seek out funding from banks or other lending institutions.
If you need more money than you can rise through crowdfunding or your own savings, you may want to seek out funding from a bank or other lending institution. There are a number of loans available specifically for small businesses.
11. Set up a payment plan with your creditors.
If you are struggling to make payments on your debt, you may want to set up a payment plan with your creditors. This will help you avoid defaulting on your loans and damaging your credit score.
12. Manage your inventory wisely.
In order to keep costs down, it is important to manage your inventory wisely. Make sure you are ordering the correct amount of inventory and that it is not sitting in your warehouse for too long.
13. Use technology to automate your finances.
Technology can help you automate many of your financial tasks, including tracking expenses, creating invoices, and paying bills. This can save you time and money.
14. Track your progress regularly.
It is important to track your progress regularly to make sure you are on track to reach your financial goal. Use a business dashboard or financial report to monitor your progress over time.
15. Seek professional help if needed.
If you are struggling to create a financial plan on your own, it may be helpful to seek out professional help from a financial planner or accountant.
Conclusion by Aron Govil:
There are a number of things you can do to reach your financial goal. By following these steps, you can create a plan that is tailored to your specific business.
Reaching your financial goal may seem like a daunting task, but with careful planning and hard work, it is definitely achievable. By following these steps, you can put yourself on the path to success.
HussaiN is a full-time professional blogger from India. He is passionate about content writing, Tech enthusiast & computer technologies. Apart from content writing on the internet, he likes reading various tech magazines and several other blogs on the internet.