Entrepreneurs understand that financial planning for their business is a crucial component for success. Not only does proper financial planning offer the business owner a roadmap toward a successful venture, it also sets the standard by which the finances are handled within the company. Working with an accountant to implement cash flow standards provides the business owner with the reports detailing where the cash is flowing in and out of the business. In addition, it provides necessary information to shift focus to areas that will keep the business financially viable.

Here are some benefits of having a financial plan and what an accountant or small business advisor can help you with:

1. Setting up financial reporting systems and helping analyze the reports generated. Proper financial planning means your business will need to implement financial reports into daily operations. When you sit down and analyze the information with your accountant, he or she will point out varying situations and conditions about where cash is earned or lost. These reports help focus your efforts to improve finances and enhance your business’s bottom line. Financial planning also establishes a baseline of fixed assets, current assets, and the intangible assets of the company.
2. Tracking of financial liabilities is crucial. Just as the assets work in your company’s favor, liabilities need to be monitored for both owner equity and long-term debt load. Liabilities, compared to your assets, will determine how to devote your resources and plan for future liabilities.
3. Analysis of your profit and loss reports help pinpoint where sales or revenue are generated and the costs of the goods and services sold versus what it costs to generate those goods and services. Your accountant will also help you understand your operating expenses, gross profits, and net income. These facts and figures help identify which ventures are bringing money into the firm, which ventures need to be modified, or perhaps even eliminated.

Financial planning is the “process of estimating the capital required and determining what it costs to complete it.”  The importance of financial planning cannot be stressed highly enough and include:

• Ensuring you have adequate funds to keep the doors open
• Help you ensure you have adequate income to meet the expenses of the business
• Focuses future growth plans
• Provides a measure of peace of mind when facing economic uncertainties
• Help ensure stability of the company
• Promote and direct future growth

Having a current financial plan is a crucial tool in your arsenal that can propel your business toward success. The accountants at BASC Expertise are available to discuss your company’s financial planning strategies.