When you operate your own small business, it is essential to create a well thought out financial plan to give your business the best opportunity to succeed. While it requires some level of financial literacy and forces you to analyse your current financial situation, the benefits are worth the extra time and effort. A financial plan helps you keep track of your business’s short and long-term plans, while avoiding any hiccups that may arise in the future.
Setting a plan into motion also allows you to prepare for your retirement ahead of time, meaning you can start working towards this goal today to avoid problems in the future. But what are the necessary components of a financial plan, and how can they be implemented into your current business?
Get started on creating a financial plan for your business by speaking to Taggart & Partners, the business accounting firm small and medium businesses in Brisbane trust. Give us a call on (07) 3391 1188, send an email to enquiries@taggartandpartners.com.au, or get in touch online.
Essential Financial Plan Elements
Set Your Goals
When creating any plan, the most important thing to consider is what you wish to achieve. Begin by drafting the goals you aim to accomplish with your business so the plan can be designed to make these goals a reality. Set short-term, medium-term, and long-term goals, and specify a date you wish to achieve them by, so you have a constant target in mind. One of the key components of a financial plan is to have smaller goals that lead you towards bigger objectives, creating a sense of progression that makes you feel like you are always moving forward.
Assess Your Current Finances
For your financial plan to be effective, it is important to properly analyse where your business currently stands. Try to take an unbiased viewpoint as you assess your financial situation, painting a clear picture of where your business can improve and what it is currently doing well. Scour through your pay checks, bills, bank statements, and receipts to track your finances and note where you are over and underspending. Whether your end goal is to retire early, clear your debt, or grow your investments, understanding your current situation is one of the biggest financial plan elements to be aware of.
Plan Your Budget
A key part of increasing your finances is to create a budget, which allows you to see how much your business is spending and what can be cut to save costs. This is essential for helping you achieve your goals and helps keep your business on track without losing money to unnecessary uses. Plan your budget to accommodate your end goals while taking necessary spending into account and stick to it to bring your plans to fruition.
Risk Analysis
When creating your plan and budget, it is also important to consider any potential risks that may affect your business’s finances. By devising a risk analysis, you can plan for any problems that may reduce your financial growth and success, and plan for ways to avoid or mitigate these risks. Risks may include economic factors, procurement strategies, and revenue generation. All the components of a financial plan should be designed to achieve your goals, and a risk analysis helps protect these goals from outside factors.
Create a Retirement Plan
Most people create a financial plan to help them plan for retirement, putting steps in place to save the required amount of money. A general rule when planning for retirement is that you will need around 80% of your current income to support your lifestyle post-retirement. This does not factor in what you may wish to achieve in retirement, however, as you may hope to travel the world for an extended period. Creating a plan that considers your personal retirement goals helps to keep you motivated as you work towards your prize.
Start an Emergency Fund
While it is great to plan for the good times, it is also important to be prepared for any emergencies that may happen. Whether it is your business drastically losing income or damage occurring to your property, starting an emergency fund helps cover you if any nasty surprises occur. An emergency fund is one of the essential financial plan elements for ensuring both you and your business stay protected in any circumstance.
Consider an Estate Plan
When planning your finances, it is important to consider what you wish to happen to your wealth if you pass away. An estate plan ensures your family will be taken care of when you are gone, allowing you to assign where your finances, real estate, and businesses will go. An estate plan also allows you to decide who will make decisions on your behalf if you are unable to because of an accident. One of the most important components of a financial plan, an estate plan gives you peace of mind that your family will be protected in the future.
Contact Taggart & Partners Today!
At Taggart & Partners, our business advisors work to find ways to maximise the growth of your business by helping you craft a financial plan suited to your unique goals. To start discussing your financial plans, give us a call on (07) 3391 1188, send an email to enquiries@taggartandpartners.com.au, or get in touch online.