Now with the business world being so unpredictable no matter what line of work you’re in it is more important than ever to have financial planning for your business. If you have enough experience its possible for you to do the plan your self if not you can hire a bookkeeper or financial planner to do this for you.
There are different things you will need to include in your plan and you will also need to discuss these with your bookkeeper before they complete the plan for it to have a positive affect on your business some of these factors are:
- Financial forecast – You need to create this after you have made your business plan as your business plan will have a great affect on your financial forecast. Things you will have to include in your financial forecast will be; how much capital you will need if you require external funding, what security you can offer to lenders or investors, sources of your revenue and income and a profit and loss forecast (this should include how much profit you expect to make off your projected sales and after your costs of providing goods or services). You will have to include cash flow statements in your plan also this will include; showing how your business will have enough capital to survive on its own for at least the first 12 to 18 months, consideration on factors such as sale timing and salaries. The more details you cover in your plan the less likely it is for something to go wrong especially if you include the cost for any un-foreseen expenses into your plan.
- Sales forecast – Some questions you need to ask yourself before setting out your forecast are; how many new customers you gain each year, how many customers you lose each year, what is the average cost of each sale to each of your customers?, are there certain months through out the year where you gain or lose more customers than usual? With new businesses it is slightly harder as you don’t have any previous trends to go by so you simply have to rely on good marketing skills and judgment. If you own an existing business then you will be able to take a look at previous year’s sales and conduct an estimate, for example do you know of any existing customers that are going to buy more or less than last year?
If you are going to have a bookkeeper create the forecast for you in order for it to be successful you need to ensure you have given them all the information about your business and the amount of sales as you possibly can.