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Posted on Mar 17, 2016 in Financial

The golden rules of financial planning

Starting a small business may feel like an adventure and along the way you will take a few risks, but that doesn’t mean that your activity as a manager should be only spontaneous. In fact, the more you plan, the better. Hire professional and reliable financial planning services as soon as you start the company to make sure that your future is secured and you don’t risk losing your assets. The strategy of course may vary from case to case, because each business is different, but there are several rules of thumb that you should keep in mind.

Know your value

Before you start thinking about long term profit or growth opportunities, you have to know yourself, know your business and how much it is worth. Only after you find out the exact figure and you plan future actions. You can calculate your net worth yourself by adding up all your debts and expenses and subtracting them from your assets. The larger the sum that remains, the better. If the result is negative or close to zero, you could expect some challenges.

Set your goals

What milestones to you wish to achieve with your small business? Do you want to remain on the local market or expand? Do you want to incorporate more services in the future? Each and every one of your activities and decisions should be purpose-driven. To stay organised, make a list of what you want to accomplish in the short, medium and long term.

Establish financial requirements

After setting your goals, you have to calculate how much money you need to turn these goals into reality. You can calculate the approximate amount yourself, but, for more accuracy, ask an expert to do it, because factors such as inflation and the current state of the market need to be taken into account.

What risks can you afford to take?

Few successful players have arrived where they are by playing it safe. Sometimes, you need to take bold decisions in order to win, but that doesn’t mean that risks should be taken blindly or based on gut feelings alone. Talk to a financial planning expert and find out what sorts of risks you can take based on your financial situation and business value.

Analyse investment opportunities

Investing is essential in business, but how do you know in what to invest? Some sectors are more profitable than others and choosing something can be quite tricky, because the market is subject to many fluctuations. What seems like a good idea today could collapse in the following decade, so make sure you talk to an expert to get inside information. Basically, all your investment plans need to be backed up by concrete figures.

Last, but not least, try to think of financial planning services as an investment for your business. Even if you’re a startup and have budget restraints, you shouldn’t try to plan all by yourself, because, wanting to cut costs, you could end up losing it.