Business Financial Planning: what it is and how to do it

This, in turn, favors the company’s sustainable growth and its own longevity. But it’s not enough to invent numbers that you think will come true, without any criteria.

There are techniques and routines widely used among entrepreneurs from different areas that you can follow to build good business financial planning. We are going to talk about several of them in this article, which works as a guide to qualify the management of your business.

Is that the kind of support you need to get your house in order? So, keep reading!

What is business financial planning?

Corporate financial planning is a management tool that includes a series of procedures used to project the income and expenses of a business.

In a company that is being created, it must be part of the business plan , as it helps to understand the financial viability of the project. In an active company, it helps to plan the budget and cash flow, in addition to identifying the impact of possible investments on the company’s balance and obligations.

What is business financial planning for?

Business financial planning is a critical process for any business. From it, the company is able to understand its quality standard, assess existing risks and identify points that can be optimized to reduce waste .

In addition, teams can intelligently cut expenses without compromising the company’s competitiveness. If done well, business financial planning also helps the business to set strategic goals and objectives in a smarter way. The brand, after all, will know how to evaluate what is within its reach and, at the same time, identify high potential opportunities.

In this way, the future of the company will be defined with greater safety and quality. In other words, having a good corporate financial planning allows managers to understand, in a broad and precise way, the state of the brand and its budget . As a consequence, the decisions taken will have a much lower degree of risk. Thus, the brand’s competitiveness can be maintained even in crisis scenarios.

What mistakes should be avoided in business financial planning?

To create business financial planning, the business must avoid some common mistakes that reduce the chances of teams identifying opportunities and, therefore, the effectiveness of planning.

Check out the highlights below!

Not communicating with teams

Communication is a basic point for any business financial planning routine. Managers must know the teams’ projects and investments.

In addition, they need to have a complete view of the problems faced. These points lead to a more efficient and intelligent distribution of resources. Everyone will have what it takes to deliver the expected results without major difficulties . Furthermore, errors can be corrected easily.

Not reviewing the plan

A company’s demands change regularly. Therefore, it is essential that the business maintains a plan aligned with the needs and objectives of the teams.

This gives managers the ability to direct resources to the most important sectors. In other words, corporate financial planning should be concerned with keeping in line with the company’s goals. This will ensure its effectiveness and optimization properly.

Do not use indicators

The quality and performance indicators give any business a comprehensive view of the state of its operations and the points that need improvement. After all, the brand will be able to identify areas with waste and chronic problems. This minimizes the risks of planning not being able to help the business reach a new level of quality.

In other words, the indicators and metrics must be used for the company to understand what needs improvements and how planning can help the brand to achieve them quickly. Thus, planning will have a deeper impact on brand operations and its future.

How important is financial planning?

Without reliable business financial planning, it becomes dangerous to make strategic choices that involve investing money. After all, is it worth expanding the business by hiring more employees, buying better equipment or opening a new point?

And how to know the answer to that without having recorded on paper the projection of the store’s finances in the coming months and years? In addition, the manager loses a valuable resource to identify cost reduction opportunities, which could make the business more competitive or increase its profitability.

What are the benefits of financial planning?

Having a good financial planning helps the company to reach a higher level of performance. After all, all teams will have the budget needed to run their operations with the right supplies and tools. To reinforce the importance of business financial planning, see below some of its main benefits!

Makes a new business more viable

One of the main characteristics of business financial planning for new companies is its ability to become a true roadmap for growth. That’s because the plan, as seen, helps design the place where you want your business to be in the coming years.

In this sense, the manager can anticipate challenges, opportunities that should be taken advantage of and outline possible paths, in addition to strategically directing investments.

Makes an established company more sustainable

Corporate sustainability is related to the set of practices and behaviors incorporated that allow the business to grow economically. It is, therefore, a broad task that involves everything from the proper use of available resources to the promotion of ethical conduct in the corporate environment.

Thus, business financial planning is the right tool to ensure the strategic management of the business, thinking about the organization and continuity of operations in a consolidated company.

Qualifies decision making

It is true that strategic planning does not eliminate the possibility of error. However, it allows qualifying decision-making by the manager based on the analysis of data and information about the reality of the business. This allows the actions to be compatible with their real problems and reach the proposed objectives.

Reduces financial risks

Another important benefit is the reduction of financial risks. Although many of them are unpredictable, it is possible to use planning to avoid or manage some of them.

As an example, it is worth mentioning the economic crises that may affect the market, from the contracting of insurance, constitution of emergency funds, among others. It is also possible to predict risky investments for the reality of the business, avoid waste and reserve resources for unforeseen expenses.

Helps create goals and motivate employees

The importance of business financial planning lies especially in the clarity of objectives it brings to your company. Through it, the manager and the entire team know exactly where they are, where they want to go and what are the goals and actions they need to put into practice to get there.

This, of course, motivates employees, who start working with well-defined purposes. In addition, they can often look back at what has already been done and see the team’s progress towards the proposed goal.

Helps lower fixed and variable costs

Among the benefits is also the reduction of fixed and variable costs that can be incurred in the company. The idea is that, based on an analysis of expenses and observing the available budget, the manager will be able to observe which are the unnecessary expenses that have consumed the business’s investments.

Through business financial planning, you can even identify savings in advance, checking how fast the business is growing and establishing strategies to prevent market expansion from creating excessively costly structures for the company.

Promote responsible business growth

Of course, to grow in the market, any company needs to take some risks. The question is how much these risks are measured so that development can be done responsibly and safely. In this sense, planning allows for a better allocation of investments and resources used.

This is not only fundamental for stability in operations, but also considering the social and environmental responsibility assumed by the company towards society.

How to do the financial planning of the company?

Okay, we’ve talked enough about theory. But, what about in practice? How to do business financial planning? Let’s understand better right now. Check out!

Organize your documents and records

There is no way to start business financial planning without well-organized store documents and records. You need to find and identify the information you need easily.

The best way to have this organization is with good management software, with storage of information in the cloud and a system that allows managing different levels of access between employees.

Propose goals and organize processes

When talking about projection for the future, it is clear that the objective is always to obtain increasingly better results. This desire should manifest itself in financial planning in the form of goals.

But attention: be careful that the goals are not exaggerated and unfeasible to achieve, which only generates frustration. It is also necessary to organize the monitoring processes so that it is possible to monitor the performance in relation to the goals that were established.

Put your strategy into practice

Planning also involves listing actions, that is, defining what needs to be done so that the expected result is achieved. To build this action plan, a tip is to use the 5W2H tool , answering the following questions for each objective:

  • What? : what will be done?
  • Why? : why will it be done?
  • Onde? : where will be done?
  • When? : when will it be done?
  • Who? : by whom will it be done?
  • How? : how will it be done?
  • How much? : How much will it cost?

Note that, to justify the name of the 5W2H tool, we have 5 questions starting with the letter W and 2 starting with the letter H.

Analyze and evaluate for qualifications

Ideally, business financial planning should be done with a lot of discretion, but that does not mean that it is a rigid and immutable document. Thus, it should be periodically reassessed and, whenever necessary, adjusted to reflect a greater balance between the desired and the most likely scenario .

Not to mention the fact that the measurement of current results is a new subsidy, which already serves to update planning, making it more faithful to the facts.

Apply adjustments and modifications

With the evaluations of the previous topic, it is not only the corporate financial planning that must be changed, but also the processes and actions.

For example, it may be that the experience of the last few months, the data collected and new forecasts about the market and consumer behavior indicate that it is necessary to increase the selling price of a product. In that case, you need to understand whether this would make sense for your business or not.

What can’t be missing for assertive financial planning?

Below, we present some tips for your business financial planning to meet the objectives and effectively be a reference document to guide the decisions taken. Come on?

Identify the real business situation

As optimistic as you are about your company’s potential and the quality of the product or service , you need to be realistic. Try to take into account your weaknesses and the strengths of your competitors. Understand what you do best and worst and try to always improve.

Simulate different scenarios

Even if the planning has been rigorously supported by data and has considered the most important variables, even so, there are no guarantees that what was designed will come true.

As it is not possible to be completely precise, the best thing to do is to think of more than one scenario, which allows you to prepare action plans for different situations.

It may seem like a waste of time to make separate plans that include company measures, but this detail can be invaluable in avoiding or circumventing a crisis.

Make an action plan

Corporate financial planning needs to be aligned with the strategic objectives of the business. And what store doesn’t want to grow, expand and increase its revenue?

But that doesn’t happen by magic, you have to roll up your sleeves. As much as your company is a stable business that is not threatened by constant technological advancement and globalization, it is important to list actions to be taken to achieve the intended financial results.

If there are no big projects or financial investments ahead of you, start by implementing continuous improvement processes, as there is always room for improvement, whatever the area.

Calculate the ideal price for your service or product

In a company that is just starting out, financial planning needs to include the definition of the sale price of each product or service offered to the consumer.

This calculation must be done carefully, considering fixed administrative costs, production cost, taxes, other variable expenses and, of course, the intended profit margin . In companies that have been in business for some time, financial planning offers a chance to review these numbers, looking for opportunities to improve the price or increase it, if necessary and prudent.

Use technology to your advantage

When we talk about “putting on paper” such a number or information, don’t take it literally. There are much more practical and efficient technological options. And we’re not just talking about Excel spreadsheets, which can be useful, but planning and financial management software that makes everything much more agile. Whatever the size of business, there is a solution on the market that fits your budget.

Consider the help of a consultant

One of the main causes of bankruptcy in companies is the lack of knowledge about financial management tools on the part of entrepreneurs, which was revealed by Sebrae .

If you have trouble planning cash flow and calculating your working capital needs, among other tasks, you don’t need to learn by trial and error.

Especially because this method can result in debts that are difficult to pay. Study the subject or look for a professional (or company that provides the service) used to helping businesses organize and plan their finances.

Regularly record, monitor and control financial operations

It’s not enough to put a lot of effort into creating business financial planning and then stop worrying about your company’s financial strategy.

Having a record of all financial information allows you to measure your return on investment ( ROI ) and keep your planning up to date. Thus, the chance of making the right decision regarding a particular project or investment increases considerably.

Keep a long-term financial view

The entrepreneur who wants to see his company perpetuating itself in the market needs to have the vision to anticipate events that impact or may impact the business.

Understand that it is important to plan for the long term and align two things: the projection of finances with the expected scenarios.

What is the step-by-step process for financial planning?

Do you understand the main points of attention and details to take care of in business financial planning? So, it’s time to put your hand in the dough and get to work. Follow the steps listed below.

Make a projection of income and expenses

The first step in carrying out business financial planning is to project the expected revenue and costs. And the best way to arrive at these numbers is by consulting the history of previous years, market estimates and sales team goals.

Rely on methodologies to understand your company

One of them has already been mentioned here, which is 5W2H, and the other is the SWOT analysis, which must list the following aspects of the company:

  • strengths (forces);
  • weaknesses;
  • opportunities;
  • threats.

Of course, there are many other methodologies, but starting with these two, you’re off to a good start.

Understand, control and reduce your costs

Corporate financial planning encompasses the diagnosis of the company’s operating costs. It is a great tool to support actions that make the company more efficient, reducing these costs and making it possible to reach a more attractive sale price.

Define a negotiation routine with suppliers

Having a good relationship with suppliers is essential to optimize cash flow and production logistics. Turn this into processes, with a negotiation routine to always look for the best conditions for the company according to the moment.

Engage your team

If you build corporate financial planning collaboratively, you will undoubtedly increase the team’s engagement in executing the proposed action plan. Therefore, listen to everyone’s opinion and try to put the best ideas into practice.

Count on a management software

As previously mentioned, there are excellent technological solutions to make financial management and other company processes simpler, with the integration of numbers from different sources in the same environment.

measure the results

The final step is to monitor the results to find out if what was planned worked or if changes are needed in the financial planning and action plan. Software and systems help collect, store and process this information quickly and securely.

How good tools can be useful for planning?

As seen, there are many details that you need to be aware of so that the financial planning of your business is assertive and, in fact, brings all possible benefits.

In this sense, having good tools can be essential to centralize the data and information generated daily and prepare complete reports that help the manager analyze. There are several tools available on the market capable of assisting in this task.

However, it is important to pay attention to established partnerships, so that your company is always supported by efficient support. Furthermore, it is interesting that the contracted solutions are integrated and complete. In this sense, it is worth thinking about the company’s processes as a whole and the specific needs of the business. For example, having quality means of payment can facilitate management.

This is because, by centralizing receipts in a single tool. It becomes easier to manage your sales, view fees charged on entries, check business performance in detail, etc.

Dedicating yourself to producing detailed and reliable business financial planning is essential for anyone thinking of starting a business . This tool will help to understand the financial viability of the undertaking and which path the company will take to reach the break-even point, then make a profit and then, finally, recover the investment made.

To build a successful company, it is not enough to have a good idea. It is necessary to transform it into actions that generate value for the consumer willing to pay for it. And to produce that value. You need to invest. In structure, equipment, people, marketing, among others.


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