Setting financial goals and developing short and long-term financial plans will help you be more strategic about your business finances. Keep in mind that financial planning is not just for the future growth of your business; it's also a way to make sure you can prepare for any unforeseen circumstances that may occur during the life of your business.
Many business owners may have a financial goal to grow their company, and financial planning can help you set realistic goals with the steps necessary to accomplish them. When deciding on a financial plan for your business, it's essential to be smart about what kind of growth or change you want in the short and long term to ensure that financial barriers will not get in the way of your goals. Because the truth is most businesses fail within their first five years of operating, and often it's due to a lack of financial planning.
The following financial planning tips offer a guide for company owners looking to manage their business finances more strategically:
Tip #1. Create a clear budget for your business and your personal life. A budget doesn't have to be overly complicated, and you can easily do it using Girlfriend's Budget framework.
We've been teaching our girlfriends and business owners alike how to create a budget that helps them achieve their financial goals. The system is proven to work because it's simplified, and the GFB team supports you throughout the entire process.
Tip #2. Create a cash flow document that will help you monitor what is coming into the business and not just what's going out. This way, you can keep track of financial goals and determine a course of action that meets your goals.
As a businesswoman, you can't underestimate the power of keeping track of the financial state from an inflow and outflow perspective. Many get caught up in one or the other, and at GFB, we want you to understand how to monitor both and build realistic financial goals from this kind of data.
Tip #3. Learn how to prepare for financial emergencies like having business savings in case of an unexpected business interruption.
When COVID happened, it put a lot of unexpected business on an immediate halt. Outside of a nationwide emergency, unexpected expenses (or lack of income) will rely on being financially prepared. Savings can begin with as little as $25 a pay cycle because every coin counts!
Tip #4. Set financial goals with both short and long-term plans made out so you can be more strategic about financial planning.
Financial planning should be constructed in a short and long-term plan to break down the objectives into obtainable goals. For example, if you want to increase your time at home, you would begin to look at your business's internal support and invest in team members to give you back that time.
This example would be a short-term plan that could be an objective you can achieve within six months or less. If you wanted to increase your revenue by 25%, this would be a long-term plan that would involve more strategic planning and actionable steps to reach this revenue increase.
Tip #5. Understand the financial implications of growth or change you want to make in your company and plan for their financial barriers.
This tip dives deeper on the side of short and long-term planning and typically involves constraint management and a coach or mentor to guide you through the planning process.<