Updated: Jan 23, 2021
When considering the importance of proper financial planning, it's equally important to analyze the actual steps required to prepare a solid financial plan. In this blog, we'll help shed some light on how businesses can successfully and simply develop their short and long-term financial plans.
Financial planning is an all-round activity that requires the support of accurate financial analysis and reporting. It needs to be carried out regularly and be consistently monitored. When a financial plan isn't working out as detailed, it needs to be reviewed, modified, or, sometimes, completely redone.
The larger the enterprise, the larger the team-size required to work on the plan, as well as the need for a more tenured skill set. Every business size and type will have to abide by the same, if not similar, steps for financial planning - so lets dig in.
Step One: Review Your Entire Strategic Plan
Before planning to develop a strategic financial plan, enterprises have to develop and review their entire business plan for the period in view. They have to determine what they plan to achieve - even down to the granular, department-centric level.
For example, a strategic plan may be to expand internal operations, company-wide by the next quarter. Breaking this down into the essential points of who, what, where, when and why, by department, will help make the next steps easier to apply and assign individual costs to.
Step Two: Determine Your Sales Goals and Revenue Projections
Sales and revenue projections should be made based on anticipated income generation from sales and services rendered. Projected expenses for labor, overhead, and planned project costs should also be factored into the plan.
The use of accounting software will make this task easier and should be done in conjunction with or by a dedicated finance head, as this projection will be used to arrange all finances for the business.
Step Three: Project the Cost to Support Revenue Generation
A lot of energy is put into closing sales, costing many companies a massive amount of time, effort, and cost. Calculating your total cost to generate leads and projected revenue will need to be considered and justified within your overall financial plan.
Step Four: Figure Out Total External Investments
Financial planning is budgeting - straight and simple. Also, when going through the process of creating a budget, external funding should always be accounted for if applicable to your business case.
Having a clear and concise budget readily available also increases the chances of positively impacting a company's chances of receiving external funding as it showcases the company's responsibility and understanding of proper funds management.
Step Five: Clarify Your Financial Plan and Run With It
It's important to review the entirety of your business and financial plans repeatedly to ensure that all parameters for success are well set and procedures are properly followed before company-wide adopted. It's also important to assess how the financial plan will impact the organization's market share price.
Find The Best Resources For Enterprise Financial Planning
With all of this said, however, sometimes it can be difficult to put together such complex financial and business plans. If a company is venturing towards enterprise-status, not only is your infrastructure expanding, but your internal operations and data systems likely will need to as well.
Stella Financial Solutions is unique in that not only are there tenured financial advisors ready to support their enterprise financial planning-as-a-service software, but their platform is custom-crafted to support budgetary planning and forecasting of any size business.
Leveraging Stella, especially when an in-house solution isn't viable or fruitful, is really where we shine. We want to help you explore your financial solutions and make the most out of your existing business systems to create a clear path for you to grow.
Connect with our team to schedule a call to discuss your use case. There's no hard selling - simply a conversation about how to best help you lower costs and increase the clarity of your financials.