Business and Financial plans

Successful businesses invest time to create and manage budgets, prepare and review business plans and regularly monitor finance and performance. Structured planning can make all the difference to the growth of a business. It allows the business owner to concentrate resources on improving profits, reducing costs and increasing returns on investment.

The key benefit of business planning is that it creates a focus for the direction of a business and provides targets that will help a business grow.  The main aim of a business plan is to set out the strategy and action plan for a business. Business planning is most effective when it's an ongoing process.

New small business owners may not see the need to budget. However, planning for a business' future, will require funding. Budgeting is the most effective way to control cashflow and allow for investment in new opportunities at the appropriate time.

A budget is a plan to:

• control finances
• fund current commitments
• make confident financial decisions and meet objectives
• ensure funds are available to meet future projects

Financial planning
Forecasts should run for the next three (or even five) years with the first 12 months' forecasts having the most detail. Include the assumptions behind any projections with the figures, both in terms of costs and revenues, so investors can clearly see the thinking behind the numbers.

The forecasts should include:-

Cashflow statements
Cash balance and monthly cashflow patterns for at least the first 12 months. The aim is to show that the business will have enough working capital to operate.

Profit and loss forecast
A statement of the trading position of the business and the level of profit anticipated, given the projected sales and the costs of providing goods and services and the overheads.