Business financial planning: step by step to create one from scratch

Structure is the main keyword for good business financial planning. It is through a well-organized action plan that you can make good decisions and ensure the growth of your business. With a solid foundation, you gain time and information to project profits, anticipate periods of ups and downs, as well as knowing the right time to invest or save.

To help you, we have organized a very functional step-by-step guide, with tips for increasing your working capital, organizing your cash flow and helping you to have a real vision of your company’s financial health, after all, every entrepreneur needs to feel in control of your business. Check out!

What is business financial planning?

Corporate financial planning is a tangible organization of the company’s financial situation. It’s the way you organize your ideas and create a roadmap to achieve all your business goals.

Having a business plan in this category is essential because it helps with decision making, as we said before. From there, you know where to start , what the market opportunities are, what you can and cannot afford financially, among other details.

Strategically, financial planning is necessary and you don’t need anything too complex to create your own action plan.

Step by step to create a financial action plan for your company

Step 1 – Determine the company’s financial goals

Have you ever heard the saying that if you don’t know where you want to go, any path will do? The same thing happens with a lack of corporate financial control . If you don’t have goals and don’t know the purpose of your business, you won’t know when and how to achieve success.

Therefore, start your financial planning by listing all the goals you want for your business. List what motivated you to invest in this sector and what makes people buy from your company.

When you set goals, you automatically know how much you need to invest to achieve them. In other words, it becomes much easier to make decisions without risking the company’s success.

Remember that it is very important to have big goals, but in these cases, divide them into smaller goals, which are easier to manage and are a tangible way to achieve greater goals.

Step 2 – Start an emergency fund

No matter how small the amount, it is always important to maintain a financial reserve. Plan to save a percentage of the company’s assets every month.

This reserve will provide support in low months, in addition to being essential in times when you need to make an investment – ​​whether foreseen in financial planning or not.

A good strategy for building an emergency fund is to reduce your business costs , which will ensure financial breathing space. Cost reduction includes negotiating fixed costs, such as rent and payment of suppliers, and variable costs, which include consumption bills such as water, electricity and purchase of raw materials, for example.

Step 3 – Organize business debts

Entrepreneurs know that it is often necessary to make investments and use credit for the business to prosper. However, it is even more necessary to maintain control of these debts in order to ensure the financial health of your business.

Although investment is necessary, debts are an apparent risk and can compromise the company’s cash flow . Therefore, your financial planning must consider the situation of all outstanding debts, as well as an action plan to pay them off in the shortest possible time.

Step 4 – Keep the balance sheet up to date

The balance sheet is an accounting report that offers an overview of the company’s financial health. From this report you can, for example, develop more assertive projections regarding liabilities and assets and create a contingency plan for the most critical periods.

Therefore, it is necessary to keep this report always updated to ensure that you have all the financial information about your business to support your financial planning.

Step 5 – Constantly monitor the action plan

What is not monitored cannot be improved. Therefore, it is essential for business management to monitor the action plan.

Establish a maximum period of three months to review the strategy and analyze the results. Financial planning aligned with monitoring helps to identify problems even before they appear.

Bonus Tip – Separate personal and business finances

There’s no point in having a good definition of finances and designing good planning if, on the other hand, you don’t monitor the execution and control of expenses, right?

For this reason, having an exclusive bank account for your business can be a good alternative to control all of your company’s inflows and outflows more quickly and optimize your financial planning. Furthermore, a digital corporate account becomes an ally as it has zero maintenance fees and financial services personalized to the needs of the entrepreneur.

SWOT analysis: how does it help with business financial planning?

The SWOT analysis , as long as it is well applied, can become your greatest ally when making financial planning.

The acronym, in English, is made up of four letters:

• S (strengths); are your company’s strengths;
• W (weaknesses): these are your company’s weaknesses;
• O (opportunities): these are market opportunities
• T (threats): these are the threats presented by the market (competitors).

Each of these letters represents the ends of a quadrant, considered the essential structures, responsible for making the company grow.

First of all, in each of the quadrants, you must identify:

• The strengths of your business. This is where your biggest sources of income come in, such as best-selling products or services. Also consider your structure, team, machinery and everything that, internally, generates good income for the business;
• The weaknesses continue in the opposite of the previous table. Identify the financial issues that put your business at risk, such as the lack of a structure, debts, lack of working capital , etc.;
• Opportunities must be filled considering the market you operate in. Be very realistic and, above all, be careful not to list as an opportunity what is nothing more than an expectation;
• Finally, to close the analysis, in weaknesses you will identify competitors, low periods, possible market crises, etc.

Therefore, with the SWOT analysis completed, it is possible to draw up a much more efficient business plan and make better decisions, optimizing your financial planning without compromising the management of your company. Also remember to carry out this analysis periodically!