Starting a small business is definitely not a small undertaking!
It takes a lot of research, knowledge, and planning to successfully pull it off. It is estimated that one in three new businesses fail in the first 12 months. Much of this can be attributed to a lack of business planning.
Financial planning is by far one of the most important aspects of your new business if you want to succeed long term. So here are our thoughts on why it is so crucial; A basic overview of how to go about it.
Why knowledge is power
Knowing where you have come from and where you are headed is powerful. Money is obviously at the forefront of any business concerns and can cause major headaches when managed incorrectly.
Day-to-day cash flow tends to be one of the biggest difficulties that small businesses encounter in their infancy. Cash can very easily get tied up in stock that hasn’t sold yet or from slow-paying clients, leaving you with very little left to pay your other running expenses.
Without a plan to manage your Melbourne business’s cash flow effectively, you could end up in hot water trying to explain to suppliers or service providers, why you can’t pay them!
If you plan your finances effectively, and forecast where any upturns or downturns in business might be, you will be able to smooth out these differences month to month, so you are less likely to get caught short.
Planning also helps you to define and work towards your longer-term financial and business objectives. On review at the end of each year, you can then see whether or not you are meeting those objectives. This, in turn, helps you to adjust your plan for subsequent years, by applying the lessons you learned from the year before.
In this way, you aim to stay ahead of the game to maintain financial viability and a steady rate of growth, rather than just putting out fires as they occur or, heaven forbid, steadily going backward.
DIY options and professional planning
These days there are plenty of templates available online which can make your business and financial planning a little easier, particularly if you are new to the business. These may provide a useful starting point.
As your business grows, however, you may find it more beneficial to hire the services of a professional business, or financial, planner. A professional can help to ensure you are planning as effectively as possible, and can also help identify areas for improvement and opportunities for growth.
So if business planning remains your number one headache, give us a call and let our experienced team steer your business in the RIGHT direction. Don’t become another small business failure statistic – we can help you thrive! If your business can benefit from some expert financial and planning advice, we invite you to contact us at Hart Partners today.