What is Financial Planning? Financial planning is included in a strategy carried out to achieve the main goal of managing finances.
Scienceloversss - Financial Planning is one of the things that is quite important in managing and managing finances. Be it business or personal finance requires this financial planning. This activity is still considered trivial by many people, even though its role is quite important in managing finances, especially when doing business. For business people, it is very important to know the importance of financial planning, especially in business operations. Let's look at the following brief review.
What is Financial Planning?
Financial planning is included in a strategy carried out to achieve the main goal of managing finances. If you talk about financial planning in a business, the main purpose of the plan is to maximize profits and make the business grow bigger or grow.
Business operations are very dependent on good and mature financial planning. There are many important aspects that can affect the profits and running of a business in financial planning. Not a few small businesses fail because their financial planning is not mature and inaccurate. Therefore it is necessary to know the stages and tips for making good financial planning in business.
How to Make a Financial Planning for Business
There are stages to making a good financial plan. Especially in business, financial planning should not be arbitrary. Financial planning must be mature and made with the right steps.
1. Compare Set Up Cost with Capital
What is meant by set-up costs are administrative and initial marketing costs. Then the registration fee, license, and other legal fees. There are also equipment costs and asset requirements, as well as initial working capital also included in the set-up costs. Determine the number of funds that must be used for business capital, whether there are own funds that have been prepared or still need to borrow from other parties, this must be considered carefully and carefully.
2. Projecting Profit and Loss
To plan the finances of a business, it is necessary to make a projection of sales and operating expenses that are important and must be carried out. Make a projection for the next year since starting the business. The trick is to make a comparison of turnover with the cost of goods sold and added with fixed operating costs. Determine in advance the selling price so that you can calculate the potential profit.
3. Estimating CashFlow
Cash flow is very important to watch carefully. If there is a cash shortage, business operations will be disrupted. Therefore, estimate cash flow well even if you have to wait for customers who are slow in making payments or choosing a credit system.
4. Estimating the Balance Sheet
If the business has been running for one year, it means that financial planning requires a business balance for 12 months of business operation. The business balance consists of assets, capital balances, and loan balances.
5. Analyze the Break-even Point
If you are ready to start a business, you must be able or dare to determine when the initial capital will return since the business first operates. This is to calculate how much revenue must be generated or achieved in order to break even.
Tips When Making Financial Planning
In making financial planning, it is necessary to pay attention to several things so that you can start well. There are important components or aspects that must be understood so that they can help and facilitate the initial objectives of making financial planning to be achieved.
1. Purpose of Financial Planning
Before deciding to make a financial plan for a business, it's good to first know what the purpose of making the plan is. Is to avoid the risk of loss in business operations. Is to maximize business profits. If you know the purpose of making financial planning is clear, of course later you can make business people focus more on the expected target.
It should be noted, if the purpose of making this plan is to control cash flow and in order to be able to expand in the future, what needs to be done is to maximize business financial management properly. The trick is to place profits on promising investment instruments. In addition, it is also necessary to reduce operational costs and optimize marketing strategies with limited capital.
2. Period of Achievement
The more you define your goals in more detail and specifics, it is also necessary to determine the time for achieving the goals that have been determined at the beginning. For example, the goal is to expand within 2 years, meaning that during the 2 years before the expansion, you have to manage cash flow well and maximize sales profit.
3. Do It Effectively and Efficiently
If there are goals and targets for achievement, then the next step requires the right strategy. Given that nowadays everything is digital, it is better to use social media to be able to build brand character as well as to maximize sales. Make sure every step or strategy used is efficient and effective.
4. Using Expert Human Resources
For business, people do not have to be able to understand all marketing strategies. It would be better if you use people who are more competent and are experts in their fields to help realize an efficient and effective marketing strategy.
5. Understand the Risks
When planning, you must understand the risks involved. This is natural because every action taken will certainly have obstacles. Understanding operational risks early will be very helpful in preparing solutions. So losses will be avoided and the risks that have been considered can be reduced as well.
Well, that's a brief review of financial planning for a business. It's good to do it carefully and carefully so that the results can be in line with expectations. The point is because it plays an important role for business, never ignore making financial planning.
