Every company has a common goal: to grow. For this to happen, it is important to take care of a number of internal factors, such as product, service and salaries, as well as external factors such as interest, inflation and falling economy. http://www.irishpsychics.net/best-online-payday-loans-fast-approval-via-our-online-payday-loans/ has details
This means that, in addition to the difficulties imposed by the scenario experienced by Brazil, the entrepreneurs themselves have not made the right decisions for the longevity of their business.
Careful planning of how to use the resources available
Without money, it is impossible to make a business go far. Careful planning of how to use the resources available is imperative to ensure the success of a company.
That’s why business planning is much more than spending control. It is able to determine short-, medium- and long-term financial goals, helping entrepreneurs make the best decisions for their business.
Good planning, the current situation of the company and, through a set of actions, allows:
- Anticipate problems
- Level your budget
- Determine whether or not there is a lack of resources
- Set goals
- Make investments
Think about your household expenses. In order to have a healthy financial life, you must define your priorities, superfluous discard, and understand where and how your money is being invested.
Guide to Business Financial Planning
Now that you know the importance of conducting good business financial planning, it’s time to put it into practice.
As we said before, the main function of this tool is to help companies to have longevity. In a scenario like that of our country, this becomes even more imperative.
After all, according to IBGE, more than half of the companies founded in Brazil closed their doors after four years of activity (figures released in 2015, with data from 2013).
Take note. Follow our steps and achieve even more success in your company.
1. Do not mix individual with legal
It is very common for entrepreneurs to mix their personal finances with professionals, which always gets in the way and confuses the cash flow of the business. To make good business financial planning, it is essential to separate the individual from the legal entity.
Set a pro-labor for the members and follow it to the letter. That way, you can understand what the company’s current expenses are, to make adjustments and perform analyzes that will allow you to make the best decisions in the future.
2. Maintain a relationship with the financial
Dialogue with your financial sector should be part of the whole process within business financial planning. It’s no use setting goals, thinking goals if everything is not aligned with this important department of your company.
If you are the one who takes care of the financier, organize your weekly schedule and set aside time for planning. If it is a task for your partner, understand that it is essential that you have the characteristics to be a good professional in the industry. If you are a contracted person, you have no secret: look for the best.
3. Organize cash flow
Cash flow is the tool that allows you to make a financial control of the inflows and outflows of money of a company, based on a certain period of time. It is the heart of all financial planning.
Identify your company’s revenues and expenses and set a time frame for your reviews.
Put on paper what your accounts payable and receivable. This gives you an overview of your company’s situation, allowing you to identify problems and propose solutions.
4. Make predictions for the operational cycle
The operational cycle is the sum of all the events that occur in a company, from the purchase of the raw material to the sale of the product.
How to plan is also to anticipate scenarios, forecast your cycle, defining the costs required to maintain each stage of your production process.
It is in this step of financial planning that you avoid going through unimagined situations, having to resort to loans.
5. Beware of interest
As we explained in the previous step, if you do not make predictions for the operational cycle of your business, you run the risk of needing loans.
The high interest rates charged by this modality are among the great causes for ending the profits of a business and, consequently, its continuity. When conducting your business financial planning, always keep an emergency financial reserve for use in contingencies.
6. Negotiate prices and payments
One thing pulls the other: having a good price allows you to charge more interesting value to your consumer.
If you sell products, look for the best value for the purchase of your raw materials. If your company offers a service, check the amounts spent to keep it running and streamline your process.
Keep a bargaining agenda with your suppliers. This allows you to establish a relationship with them, to achieve higher payment terms and better purchase costs.
Then consider factors like production cost, your expectation of profit, fixed and variable expenses, and establish the best final price.
7. Track return on investment
The ROI, or return on investment, is nothing more than the ratio of the amount of money earned or lost as a result of an investment. In a very simplified way, it’s how much you earned versus how much you spent. To calculate it, it’s simple:
Investment profit minus investment cost
For example, if you invested $ 1,000 in advertising and sold $ 5,000 of your product, that means your ROI was 3%.
In order to achieve good business financial planning, it is very important to keep track of the ROI of your business. By finding out if your spending is giving you the expected return, you can reallocate your money to actions that work the most.
Did you like the tips? Leave your questions in the comments and start doing your business financial planning right now.