Surely on different occasions you have wondered how to organize yourself better at a financial level so that the profit generated by your company is used in the best way.
In this article you will discover the key concepts and the basic structure of a good financial planning for your company, which will help you to achieve your business objectives in the short, medium and long term.
In addition, at the end of the article you will learn the 3 most common mistakes you should avoid when preparing your financial plan.
And all this without technicalities or complications. With a simple language so that you can dedicate your time to do it from today.
Financial plan of a company
We can define the financial plan of a company as the necessary budget to make the journey you must carry out to reach the destination you have set on the map (strategic plan).
In other words, the objective of financial planning is to anticipate and be able to make decisions well in advance before the events we are planning occur.
Because you wouldn’t think of planning a trip without knowing your budget and where you want to go, would you?
For all these reasons, the financial planning of a company is included in the strategic plan of the business and helps you to make numbers to know what you have to do to achieve the objectives that you have previously proposed.
Analysis of the current situation of your business
Before you start thinking about money for the future, you have to start from a current starting point.
In other words…
What is the current financial situation of your company?
You need to find out and collect the following data:
- Income: of any kind, whether from sales, rents, interest on financial products… Anything that comes into cash.
- Expenses: As well as the income, you must count all the expenses, both fixed and variable that your business has (do not forget the commissions and bank and financial expenses in general).
- List of assets and their age: Analyze the assets (real estate and movable) that your business has, and write them down along with their age, to know if they are already amortized or still have several years to go.
- Financing: All the loans, mortgages, renting, leasing… that your business has, including the remaining years, the installment paid for them and the interest of each one.
- Insurance: Although it may seem unimportant, you should write down the insurances that your business has in force, together with their expiration date and annual premium. The insurances serve to shield your financial planning and the strategic plan of your business, since if the risks of your company are not well covered, they can destroy it.
Specify business objectives
Once you have a clear starting point, the next thing to think about is where you want to get to.
As in a long journey, you are clear about the final goal, but it has different stages. Therefore, during the trip you will have to make stops and you will program the trip based on these intermediate stops until you reach the final destination.
In the case of financial planning it is similar, although instead of measuring intermediate goals in kilometers, we measure them in years.
Should you want a group of professional planners to take care of your financial planning needs, make sure to reach out here.