6 Things Your Financial Planning Checklist Should Include
They say that not planning your goals is setting yourself up for failure. While not everyone is inclined towards planning their personal financial outcomes, when it comes to your business, you must have clearly defined goals.
These goals are crucial so that all business staff and associates understand what your expectations are as a small business owner. To materialise these goals, it is crucial to have a financial planning checklist, preferably suggested by your accountant.
In any case, here is a guide to understand what your financial planning checklist must include; here is a list. Your checklist may vary based on your business type, expectations, and the scope of growth that this new year can bring.
Also, it is crucial to assess your growth and monitor progress at certain intervals of time, so you know you are on the right track. Additionally, if your business has a few minor setbacks, it is important to be patient, as these things are bound to happen. The vital factor is how well prepared you are against unfavourable scenarios and how you power through them. With that in mind, let's go through this checklist.
1. Cash Flow Forecast
Cash flow analysis is one of the most crucial tasks to perform on an annual, monthly and sometimes even weekly basis. Cash flow forecast helps in knowing in advance which months would be more challenging in terms of cash availability and which months would have better profitability. This helps in being prepared for months that tend to have weaker sales performance or low revenue generation.
2. Risk Assessment and Management
There are always various risks involved in business endeavours. Some vendors may not deliver on time, and some staff members can make mistakes with the orders; some weather conditions can affect your business affairs unexpectedly. You must analyse all the factors that can be risky and have a plan of action to manage those risks efficiently.
3. Investment Opportunities
Your business can benefit from calculated risks in the form of investment opportunities. The difference between a business that meets its growth expectations from those that do not is not taking calculated risks. Discuss with your accountant the potential to grow through smart investment planning.
4. Break-Even Analysis
Each small business must analyse how many units of product or service are needed to break even the cost of production. You will then have a clear understanding of the price point that will be optimum for your business.
5. Emergency Funds
Even when you are always good at ensuring the workflow of your small business is running smoothly, there can still be a few hiccups along the way. Some staff may go on unexpected long leaves, or a crucial piece of equipment can stop working.
In such situations, you must have the financial backing to work through these situations. Therefore, you must have enough emergency funds. If you do not have enough money in your emergency account, this could be a good point to start.
6. Insurance Coverage
Emergency funds are not enough to cover all unprecedented events that can take place in future. A good insurance plan can give your business the stability it needs in case of an unforeseen event.
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