If you are thinking about getting a grip on your finances and manage your business accounts better in the future, you will need to create a financial plan. Even if you are not a trained accountant or financial planner, you can use some guidelines to help you determine the cost of operations, regular expenses, and predict your profits. Below you will find five of the most important considerations for creating a financial plan for your business.
Review the Past and Learn from It
No matter what aspect of your business finances you are unhappy with; you need to be clear about your goals. If you have been struggling with cash flow in the past few years, it might be time to improve it. In case you are finding it hard to get your customers to pay on time, you might want to change your terms and conditions, or get in touch with a debt management company that can take care of the outstanding payments owed to you.
List All Regular Expenses
To see clearly about your business finances and find out where you are losing money. You might be paying a high interest on your fleet vehicles, or simply waste your money on services you don’t need. You can compare the prices of business services currently outsourced in your company. It might be time to compare your insurance, utility prices, and get in touch with a certified public accountant to find out whether you could reduce your tax bills next month.
Cost of Sales
You should also focus on the variable costs associated with running your business. These are often referred to as the cost of sales. They include every cost, including manufacturing, packaging, storage, and delivery. However, you will also be able to calculate the labor cost of manufacturing a product or providing a service, so you can find out how healthy your profit margin really is.
Interest and Credit Payments
In case you have invested money in your business, and are finding it hard to pay your monthly bills, you can check whether you are eligible for a better deal. No matter if it is an equipment purchase or a business mortgage, feel free to shop around, just like you do when you are trying to create a personal budget.
Balance Your Books
The key to creating a financial plan is to provide an overview of your costs and profits, make predictions on your business growth and income. Balancing books is challenging, as you will have some costs that you have no control over. However, a financial plan can help you schedule your investments and expansion to the time when you can afford it, so you can avoid getting in the red.
Every business needs a financial plan, independent of their size. If you have long term projects or would like to expand your venture, you should take a closer look at your finances before you commit to spending money you are not going to have.