A proper planning is mandatory for both start-ups and established companies and a financial plan is no exception. As the new CEO or business owner of your company, you might have never presented a financial plan for your company. So, it can probably be a daunting task for you to do. However, if you invest a little time and hard work in drafting a financial plan for your company, you will be easily able to save a lot of money and pain down the line. When the time comes to create a financial plan for your company, you might be asking yourself, Where do I start? What are the things that I need to include? These are the questions that will pop up in your mind. That is exactly how the creation of a financial plan for your company starts with.
Step 1: Find out the reason behind planning and the expected result
The first step towards building a financial plan for your company is to figure out what questions your plan needs to answer. For the most part, your plan will be applied on the whole business and all of its financial activities. So, you better prepare your plan towards the final outcome you expect. For an example, consider a company that has various stores in Manchester, London and Birmingham. The company sells phones, tablets, desktops, laptops and helps do my computer science homework. It has different additional branches where it sells computer hardware components from online platforms. Now they are looking to move into the software market but they still want to continue expanding into new ventures through partner companies. There are a plethora of ways you can organise the sales and expenditure for this company into different forms that you can report on. You should consider creating this financial plan part of a larger business plan, if you are just building the plan to find the ramifications of pursuing a particular venture. Projects never happen in complete isolation. If done without understanding the consequences of challenges and not having statistics assignment help, the company might face longer completion time, higher expenditures etc. So, you have to identify what your plan needs to produce at the simplest level. That can be a profit and loss statement, balance sheet or a cash flow forecast to satisfy an investor or lender of your company.
Step 2: Collect and combine your financial data
It is so obvious that you will need to collate as much financial data as possible about your company. It can be broadly categorized into 4 sections- income (your revenue), costs (your bills or expenditure), assets (things you buy or own) and funding (shares, capital or debt). In case the business does not exist yet, this is going to be a bit of an arduous job. However, you can still get figures for a lot of operational costs and price points.
Step 3: Do the research work
When you are creating a financial plan, it means you are not just estimating figures. Based on the options in front of you and the queries your plan is designed to answer, you will have to find out more than just the company’s existing financial data (If that has any). First you have to research the outcomes that you are likely to be planning. Find out the answers of some other questions like- What kind of price hike would you consider? How (mechanically) would you create the plan to effectively test it? The following are some key points to consider however, the list might vary a lot depending upon your company and the time period you are planning for:
- Research on competitors- what strategies and pricing are they adopting?
- Likelihood of price hikes
- Research on target customers- what is the market condition for your service or product?
- Realistic costs for deals with suppliers
- How taxation is going to affect your financial plans
- Effects of inflation on the industries you are dealing in
In the event that you are basing a few components of your arrangement of dissecting contenders, costs for great administrations or other genuine information (remembering information for your business), it pays to sort out this data well. You must keep all the information that you have gathered, documented so that you can cite it later in the time of need. This not only gives you mental peace that you can check the provenance of the information you are using to plan; it will also give the lenders and investors confidence that you have hold on the information and you can excel with the plan.
Step 4: Put it all together
Here comes the trickiest or you can say the most exciting part of your planning. Assembling the entirety of this. In the event that you are not certain assembling a monetary arrangement yourself there are loads of apparatuses accessible online to assist you with this interaction. There are likewise a ton of aides accessible which cover this inside and out. By this stage, you will have a great deal of data accessible to you to construct your arrangement with. The key thing is to remember stage 1 – why you are building the financial plan and what it needs to deliver. If you need you can take help from the best online excel courses.
Step 5: Did you miss anything?
It is obvious that some of the things will be overlooked or will change during the time you are creating the financial plan for your company. This might happen if you do not have an exceedingly good financial and research infrastructure. But you don’t need to panic. It is a part of planning a complex structure. Just keep in mind that your plan can be as complex or as high-level as you want it to be.
Step 6: Test, test and test
The financial plan that you have created is a single answer to a set of questions. So, it has to be flexible and needs to be tested. You must find out what happens in various financial conditions. And what happens if the sales don’t increase as quickly as you predicted? It is very much important to test the financial plan again and again as it can be the cornerstone for leveraging the information. If you plan for just one outcome, you will be surprised when the other outcomes occur to your company.
Disclaimer: This content does not necessarily represent the views of IWB.