You opened your business to make money. Unfortunately, it isn’t enough to hang up your shingle and count your money. If you don’t have a financial strategy in place, you’re missing out on products, services, or sales that can help you grow your company.
It’s possible that you have a budget in place and plans for the future, but this isn’t the same as a financial strategy. You need a much more comprehensive plan to meet your future goals of revenue and growth.
If you don’t know where to start, you need to work with a professional who understands the needs of your company. They can help you create a winning financial strategy.
What Is Financial Strategizing?
A financial strategy combines a look at your company’s finances to determine your current needs and how those needs will change over the coming months and years in order to meet the business’s long-term growth goals. This type of planning helps you drive your company in the direction it needs to go to achieve your dreams.
This type of planning analyzes current and future costs and income to help determine the best plan of action to reach your goals and affects many areas of your business. This includes payroll, workforce training, marketing, inventory, and research and development.
Tax planning is essential when you’re saving for retirement. You need to understanding your retirement savings options to make the best decision for the present and for the future.
What Are the Benefits of a Financial Strategy?
If things are going well in your business, you might put off developing a financial strategy or avoid one altogether. However, there are benefits to having a financial strategy during both good and bad times. Here are some of the benefits:
- Be prepared for an emergency
- Financially independent
- Enjoy an early retirement
- Create and achieve your financial goals
- Weather slow periods in your industry
Your company and its finances function properly when you have a financial strategy in place, and you take the necessary steps to follow it.Tax planning looks at what you’re going to pay in taxes this year or next year while a tax strategy looks at the long game. You need a tax strategy to meet your long-term goals and to ensure that you aren’t paying more in taxes than you should.
Areas Within a Business That a Financial Strategy Affects
When it comes to a financial strategy, it isn’t simply about cash reserves or a credit score. All aspects of your business help to make it financially stable and growing, and all need to be appraised when creating a financial strategy.
If you spend too much money on research and development at the wrong time, you might not have the funds to successfully launch and market the newly developed product. Here are some of the aspects of your business that benefit from a healthy financial strategy.
Your employees are at the heart of your business, and you need the best staff possible, but you also need to pay them. Your ability to meet payroll every week or every other week is directly related to your cash flow. As your company grows, your payroll demands also grow.
When you’re hiring new staff members, you need to have a financial strategy in place to cover the increase in salaries. Ultimately, you want an additional employee to create the growth that covers the cost of their salary. Your financial strategy makes it clear when the best times are to add to your staff and offer raises to existing employees.
Training Your Workforce
There is more to training than onboarding the new hire. Each time you release a new product or service, or upgrade to a new software program, you need to provide your staff with training. In many ways, training is one way to help your business grow, especially if you cross-train employees across multiple departments.
As part of your financial strategy, you need to plan for ongoing training for your staff as well as new hires. Training is an investment in your business. Your employees will thrive as they learn new things, and they’ll take their newfound knowledge and use it to help your company grow. Also, your customers appreciate working with well-trained employees.
One of the best ways to grow your business and customer base is through marketing and branding. However, it takes time and research to develop an effective marketing campaign that delivers the results that you want for your business. To be effective, you need a well-thought-out marketing plan.
As part of your financial strategy, you’ll become more adept at planning marketing campaigns in advance and ensuring that the funds are available to turn them into a success. A marketing budget needs to be ongoing with bumps when you release a new product or service. You’ll also need to increase the marketing budget when you want to attract new customers.
If you’re a reseller or manufacture goods, your inventory is your lifeline, and you know it’s a careful balancing act between too little and too much stock. With a financial strategy, it makes it easier to find that balance. You’ll be able to forecast how much inventory you need now and the increases that you’ll need to make in the future as you achieve your dreams of company growth.
Your financial strategy ensures that you have the funds needed to bring in fresh inventory when you’re growing. If you’re able to consistently meet customer demands for products, you’ll find that their loyalty to your company grows and so do your sales.
Research and Development
There are only two ways to grow your business: new products or services and a larger, loyal customer base. Of course, if you have both, your business will grow more quickly, so you can achieve your goals and create new ones. Your financial strategy helps you connect the dots between growth and research and development.
A financial strategy also helps you budget the necessary funds for research and development along with accurately predicting the increase in revenue that you can realize from new products or services. When you know where you want to go financially, it’s easier to make the smart moves in research and development.
Financial strategizing is an essential part of owning a business and reaching the goals that you set.
At McNurlin Hancock, we’re ready to partner with you to create a financial strategy that helps your business thrive. Contact us today for an appointment.