Today we’re going to talk about a broad topic that, for some reason, is rarely touched on – financial planning.
So, we will learn how with the help of financial management to overcome the lack of money, competently manage the budget of your business and increase the profits of the company.
Financial management is an important aspect of business organization, along with sales and marketing. We can conventionally divide the success of any business into three parts:
- Financial planning.
Marketing is a set of tools to attract customers, and sales is a set of tools to bring the attracted customers to a successful transaction with them. However, what is financial planning? How to manage the funds that you have as a result of successful sales and marketing so that the company can successfully grow and develop? Let’s talk about it!
What Is Missing In The Business In The Crisis?
It’s no secret that business today is experiencing difficult times. Any company that wants to survive the crisis and achieve sustainable growth after it is over needs established structures and mechanisms of action. One of the most important is strategic marketing.
It is a long-term strategy that involves the development of planning to promote the business for as long a period as possible in the future. The main thing to pay attention to – the assortment strategy of the company. That is, you must clearly understand what you sell and for whom, which groups and categories of goods you focus on now, what you will put in the future. So, the simplest strategy that you can change and control right now is pricing. Constantly analyze the market, study your competitors’ offers and plan your pricing policy for the future. However, you can’t just take your prices and lower them-that way, the company will simply stop making money. Look for what you can do to differentiate yourself from your competitors and think strategically.
Reserve Funds As A Liability And Evil Of Credit And Salary
Businesses’ credit burden and salaries are evil at this point, especially if the business is taking out loans for operating expenses rather than for growth. We believe that businesses should develop with their own money, and that unnecessary borrowing should go nowhere. Sooner or later, especially in a crisis, banks will simply stop lending to businesses, and what will you do? Look for investment? That will be very hard to do in a crisis.
The same goes for salaries. You shouldn’t pay them in a crisis, especially you shouldn’t take salary loans, because it’s not a loan for development and growth, it’s a loan for survival. Remember that the purpose of any business is to make a profit, not to survive.
So what to do? Save up your reserves and use them when you need them! Any company should have a reserve fund, which is created from profits and unclenched in difficult times, and better – not unclenched at all (how to do this even in a crisis, we will tell below). Important: Make reserves out of profits. Include reserves in your operating expenses and set aside a percentage of your company’s profits for a reserve fund. Just create such an expense item for the reserve, and sooner or later you will thank yourself for it.
Why It Matters. No matter how good and successful the company is right now, no matter how much it grows, you will always find something to spend your increasing profits on. It’s easy to see this in our own lives too – as our income level grows, so do our needs. It’s the same with a company, and that’s why we should have an emergency fund in case our expenses exceed our income at a certain point and for certain reasons (e.g., a crisis).
Chaos In Finances And Expenses
Chaos makes it very difficult to distribute the company’s finances. When the company’s financial distribution mechanisms are not in place, it is the boss who takes care of everything, not delegating authority in this area to the people in charge. It all leads to waste, uncertainty, and a lack of real control.
No Well-Functioning System For Generating Company Revenue
You often throw yourself into training for marketing, sales, and other things that can increase revenue, but there is no systematic approach to it all. Develop checklists that include the necessary actions for each item of business that can increase the company’s income. Marketing, sales, corporate identity work, analytics, and events can all be included there. Most importantly, get feedback from employees and customers to get an understanding of what items of your systematized actions to increase company revenue are working.
No Opportunity To Formulate A New Strategy Because Of Routine And Debts
You can’t go on a roll in a crisis, and many businesses continue to do so because routine consumes them, and company executives can’t see the underlying processes of a changing external environment behind it. Such companies don’t even survive the crisis.
The short conclusion of this part of the article is that the six points listed above should be in your sight at all times. If you pay attention to each of them, then you will have the necessary potential for the survival and development of the company.
Yes, it is difficult to form new strategies during a crisis. However, it is better to pay attention to yourself and your company now, than to try to survive on loans, salary salaries, lack of adequate brand positioning, and long-term strategy. Focus on yourself, examine your mistakes and take note of all external factors. Accept difficult external circumstances as the rules of the game and don’t blame anyone for your failures, don’t feel sorry for yourself – you just don’t have time for that right now. Improve your work. Improve the financial system of your business, develop new strategies, and we’ll figure out exactly how to do it.
Strategic planning in everything, and most importantly, in finances. And that’s the main thing to focus on in financial planning – achieving sustainable growth for the company.
Having An Effective Financial System Gives The Company:
- Achieving the company’s goal;
- Increasing the level of revenue needs;
- Correct employee exchanges;
- Proper distribution of salaries;
- Correct communication between the owner and the business;
- Availability of reserves in the company;
- Independence and autonomy of the business.