FINANCIAL PLANNING FOR SMALL BUSINESSES
Tags: Planning, Small Business, Finance, Bussiness, Business Strategy

Financial planning is a profit-making plan based on an analysis of costs and benefits. This maximally simplified explanation contains the very essence. The goal of any business is profit. We reflect it in the plan as the main task. Profit is income minus expenses. Therefore, it is necessary to analyze the ways of spending funds and find ways to increase income.

Financial accounting and analysis in business planning consists of two sections: expenses and income. Specific items of expenses and income depend on the volume of the business and the specifics of the activity.

Financial cost planning

Analysis of costs. The costs of any enterprise are:

one-time;

permanent.

One-time costs are the purchase of equipment, premises, machinery, cars, cash registers, etc. That is, it is an investment in the firm's assets.

Fixed costs are taxes, rent and utility bills, employee salaries, purchase of raw materials and supplies, advertising, etc.

All costs are also divided into:

mandatory;

optional.

Mandatory payments are something a company cannot exist without. Without them, nowhere. A shipping company won't work without cars. A programmer needs a good computer. The store is a specialized product.

The category of compulsory expenses also includes taxes, utility bills, rent, etc.



Optional payments are required to revitalize the business. They are carried out when there are free funds.

Analysis of financial results and profit planning

Income planning. This is a plan for the sale of goods, works and services. The financial planning of a newly created company implies the inclusion of a subsection "start-up capital".

Sources of start-up capital

Financial planning is the planning of investment decisions. For example, where can an entrepreneur get money for start-up capital?

Own savings. They may not be enough. Or you will have to sell some property. But there is complete freedom of action and responsibility only to oneself.

Borrow from loved ones. There is a great risk of ruining relations with family in case of failure. But you do not have to pay interest and you can negotiate any terms for repayment of the debt.

Find partners. With their help, the required amount of starting capital will appear. Although partnerships involve limiting freedom of action. Any decision will have to be made together.

Bank loan. It is possible to get the money you need. But financial institutions are reluctant to lend to aspiring entrepreneurs. And the overpayments on loans are significant.

State programs. The state supports small business and can give a certain amount to start. No interest and free of charge. But in order to receive such subsidies, a number of conditions must be met (to be registered at an employment center, register as an individual entrepreneur for the first time, etc.).

Investments. The required amount, of course, will be. But investors are investing money only in promising and new directions.

Money of future buyers. An excellent source of start-up capital, in which future profits are already laid. Customers order goods and give money. The entrepreneur, in turn, buys the ordered product from wholesalers. But this method is not suitable for every business.

Calculation of the compulsory costs when setting up a company helps to determine the required amount of start-up capital. And already from this amount it is possible to "dance" further, to plan this or that source.