Financial planning is the most essential part of running a business successfully. It acts as a reminder or a map to reach the goals within a limited budget. Investors, bankers, and creditors will always look for a proper financial plan before setting up a meeting with you. So this is clear enough how financial planning is essential for a small or running business.
The financial planning can not be made by any random employee of the business. Still, the one with expertise in financial skills can only create a proper financial plan appropriate for running a business. This is why every company or business needs a finance department to run and plan the business’s financial planning and further financial activities. With this being said, many students graduate each year with a degree in finance.
Achieving a finance degree after the struggles of finding the finance thesis writing services and completing their assignments is worth it for the professional career. An average number of finance students usually get employed immediately after graduating due to the demand for finance employees and accounting skills.
To make things more streamlined, here is the importance of financial planning in business, which makes the students lend accounting thesis help but never let them come closer to the decision of quitting the degree program in the mid-way.
ü Streamlines the company’s goals
To know what the company will achieve in the coming years, quarter year or the half-year, you will be creating the financial plan. The financial plan will guide you about the available budget for you to spend on the goals needed to be achieved. By goals, It does not mean that you place down everything you have in mind related to the business, but you need to sort out your goals too.( Adam, A. M., Frimpong, S., & Boadu, M. O. (2017).
You need to keep the budget planning in mind and then list down the tasks according to their priority level. Also, you need to differentiate the needs and wants in the goals that you have set for your business. So, firstly, focus on the needs, and then if you have an extended budget available, you can proceed towards fulfilling all your wants.
Ø It will enhance the commitments.
Once you have a financial plan ready at your end, then you will have the self-motivation to achieve it. The financial plan will clear out all the things that were just a waste of time and money, so you will only have a final plan which will have the things that are important to be achieved, and the budget is also applied to them already.
The uncertainties of having limited financial resources disappear if the financial plan is being created from the start. This ultimately means that the chances for the business to face rescission will decrease.
Ø Better decision making
Drawing out the financial plan initially also helps in decision-making power. Once you know all the things, that includes budget, expenses, and the unfortunate situations that might occur. So you can make a decision more quickly. The confidence of the staff at the management level will also boost. With a confident mind and innovative planning ideas, it will become more accessible than usual to decide for the business.
When running a business, it is imperative to be mindful about making the decisions because one wrong decision can make things worse for the business. Whether the decision is a smaller one or a bigger one, it will impact the business anyhow.
ü Management of cashflows
Financial planning plays a significant role in the cash inflows and outflows of the business. Having the expenditures aligned, you can estimate what expenditure might occur and how will you deal with it. The expected cash flows will help you know the danger before its occurrence. You will be able to play safe with planning things. You can align the surplus and shortage as per the availability of cash.
When you have a reasonable surplus, you can have the leverage of spending it on the wants of the company, and if you have an estimation of getting short with the cash, then you should look for how you can save the money available.
Things to Incorporate in the financial planning
After looking at the importance of financial planning, you might get excited about creating a plan immediately for the growth and success of your business too. However, a few things are essential to be a part of the financial statements, and you need to keep an eye on each.
ü Sales budget
The company’s estimated sales come under the umbrella of the sales budget. The sales budget incorporates the sales units, their prices, and the company’s total sales.
ü Expenses Budget
This section of the financial planning states the expected expenses that might incur by the businesses during the set budget period. In addition, though, these expenses costs can be further broken down into two separate parts: fixed and variable expenses.
ü Budgeted Income Statement
In this section of the financial planning, you will state the expected profit and loss of the organization for a time duration. This expectation will entail the financial performance of the business for the same time duration only.
ü Balance Sheet
This part of the financial statement will incorporate all types of costs. All your business’s assets, liabilities, and equity will come under the umbrella of the balance sheet; in short, all the costs from the beginning will come on the balance sheet.
ü Break-even Analysis
This section will evaluate the break-even points of your business in the budgeted period. The evaluation is done in units and values.
Reaching towards the end of the post, you might be able to figure out the importance of financial planning and all that is needed to be incorporated into financial planning. Though, if you have not yet enrolled in the degree program, you should choose the field of finance, and if you have already completed then enroll yourself in a short course or certification in the field of finance, as learning is the part of a human being. Learning things at all ages must not be taboo. Instead, it should be appreciable.
Adam, A. M., Frimpong, S., & Boadu, M. O. (2017). Financial literacy and financial planning: Implication for financial well-being of retirees. Business & Economic Horizons, 13(2).
TDH.2019. E-Learning – New Evolving Learning Techniques for Students. Online Available at <https://thedissertationhelp.co.uk/e-learning-new-evolving-learning-techniques-for-students/> [Access on 28 June]