No business owner ever succeeded by winging it. Success takes planning. As French writer Antoine de Saint-Exupéry said, “A goal without a plan is just a wish.” Good planning puts systems and processes in place to ensure that a company can continue and to make its long-term growth possible. A financial planning checklist is an essential tool to achieve the benefits of effective planning.
The Benefits of Financial Planning
Good financial planning provides the data that makes good decisions possible. It enables good cash flow monitoring and forecasting to ensure funds are constantly available to support daily operations. It helps mitigate risks. A well-developed financial plan inspires confidence in employees, investors, and other stakeholders. It provides a framework for reviewing financial performance so that well-informed actions can be taken to make financial improvements. And it helps a company adapt to changing market conditions. A good plan, formed by using a financial planning checklist, can help every business stay on the pathway to success.
The Components of Financial Forecasting and Analysis
The components of financial forecasting and analysis include sales and expense forecasting, with an analysis of all regular and recurring expenses and expected future expenses. Also required are the accurate preparation and wise use of financial statements, including a balance sheet, income statement, cash flow statement, and statement of owner’s equity. A break-even analysis is essential to understand a company’s revenue and costs relative to expansion and growth decisions. The financial plan is anchored in a company’s operating plan because that will drive its financial needs. Other components include a funding plan, an investment analysis, and a risk management plan.
Your Small Business’s Financial Planning Checklist
Use this financial planning checklist to provide the financial planning guidelines your business will need to achieve success:
- Carefully and clearly define your short and long-term business objectives. All components of your financial plan should align with these objectives.
- Develop realistic revenue projections based on market trends and your historical performance.
- Develop realistic expense projections based on market trends and your historical performance. Ensure that all expenses are properly categorized, recorded, and regularly monitored.
- Create an emergency fund allocation. Setting aside emergency funds for unexpected expenses provides a safety net for your business.
- Establish a comprehensive budget.
- Schedule regular reviews of your revenues, expenses, and cash flows versus the budget. Take action to deal with variances. Have a solid focus on liquidity.
- Explore funding options and ensure you have the funds you need to operate and grow.
- Keep a watchful eye on all debts and have a plan for timely debt payments.
- Have a contingency plan in place to deal with business and financial challenges. Use scenario planning to anticipate opportunities and challenges.
- Carefully manage your tax obligations. Tax planning and management include organizing tax documents, on-time filing, and complying with all tax laws and regulations.
- Consider the need for succession and exit plans.
- Get professional accounting and financial assistance to bring your financial planning checklist to life.
Seek Professional Accounting Assistance
Contact Orcutt & Company, based in Milford, OH. We deliver comprehensive financial management for small business owners & individuals, providing strategic solutions that best address client needs and aspirations. Our comprehensive accounting services keep you organized and give you the data you need to make prudent business decisions, including bookkeeping, payroll, and tax.
