The Benefits of Financial Planning and Analysis
Small-to-medium-sized businesses comprise 90% of the business population. For this segment, the first few years of operation are critical to scaling a sustainable, successful business.
Building your company from the ground up requires detailed planning and careful decision-making—particularly when it comes to finances.
For businesses of this size, conserving financial resources is a top priority. While you’re busy managing your company and navigating challenges, a strong financial plan will provide data to help you make decisions and continue evolving.
The Importance of a Financial Plan
A financial plan allows you to know exactly where your money is coming from and where it's going. It also helps you to set realistic growth-based goals, safeguard your business against potential threats, and monitor trends within your business.
Financial plans are typically built around profit-and-loss statements, income projections, cash flow statements, balance sheets, sales forecasts, personnel plans, business ratios, and break-even analyses. If all of that sounds like a lot to wrap your head around, don't panic! That's what financial advisors are here for: to take the guesswork (and stress) out of the process.
Creating a financial plan with your business advisor and regularly revisiting it will help you feel more in control. A holistic financial plan allows you to confidently make data-based decisions to grow your company and plan for the future.
5 Key Benefits of Regular Financial Analysis
Keeping a pulse on how your business is faring financially has myriad benefits, including:
Detailed data from income statements, balance sheets, and cash flow statements keeps you in touch with exactly where your money is generated and spent. This helps you make informed, strategic decisions.
The ability to forecast performance and account for your current debt ensures you maintain liquidity while paying down your debt load.
Along with a solid tax plan, keeping clean financial data aligned with IRS and financial reporting standards simplifies your tax process and makes audits less of a headache.
Staying on top of your financial plan relates to proper cash flow management; having a strong cash flow positions you to take advantage of growth opportunities and survive the ups and downs that come with running any business.
Identifying issues in advance will mitigate your risk exposure. Your financial plan will help you anticipate potential disruptions like market- and supply-chain disruptions and act now to lessen their impact.
How To Get Started With Your Financial Plan
Your business is constantly generating data—so how do you know which information to pull into reports, use to measure KPIs, or provide relevant insights for your financial plan? This is where an expert advisor can help.
Our CFO plan for small and medium-sized businesses includes financial planning and assessments to keep you on track. The team at Modis Advisors will provide an objective assessment of your business and guide you in making strategic decisions; we'll also make sure you know exactly what data to review and where to get it from.
We'd love to hear from you about what your current needs are and what questions you have about financial planning; reach out to us today to start a conversation!