Successful business owners are strategic, long-term thinkers. They quickly grow accustomed to answering tough questions like: where do I want to be in that time frame? What do I need to do to achieve long-term goals? Having a realistic long-term vision is the mark of a good leader, and it is absolutely essential to achieve business growth and success.
If you are a new small business owner with a lot already on your plate, you might be wondering why it is so important to invest in financial planning. The answer is simple. Doing so allows you to establish fiscal policies and guidelines that benefit your business as a whole. Long-term financial planning provides the information you need to outline the steps necessary to achieve your ultimate business goals.
How to Create a Sound Financial Plan
Are you still a little shaky when it comes to identifying your company’s financial goals? The best place to start is to analyze the difference between your current status and your long-term goals. The next step is to map out the action that needs to be taken by your team to achieve them. If you need some help getting started, consider the tips listed below.
Create Long-Term Objectives
Rome was not built in a day, and your business is no exception. The best place to start is to define what long-term means for your business. Some companies choose to take a three-year look into the future, while others develop a plan that spans five to seven years. The next step is to then convert your vision into numbers. For example, what are revenues projected to be five years from now? While you do not have to create an extensive list of long-term objectives, think of the ones you do set as strategic pillars for your business’ long-term future.
Track Your Profitability
Your business’ profitability is a basic and obvious goal. The only way a business can achieve profitability is to earn more revenue than it spends on operating expenses. Revenue comes from various sources, including income from sales, rent from a business property you may own, interest on investments, income from dividends, etc. However completely separate from profits, certain expenditures are inevitable, including payroll, vehicle purchases, maintenance, equipment expenses, marketing expenses, supplies, licenses, taxes, etc. To ensure your business reaches its long-term financial goals, it is important to keep an eye on how much your business is making and spending on a monthly basis.
Think and Plan S.M.A.R.T.
What does this acronym stand for? It means specific, measurable, achievable, relevant and time-bound; all the qualities necessary to effectively judge and manage your business’ financial goals. Following these criteria will help you pinpoint the who, what, where, when, which and why of accomplishing your goals. It will then help you measure the progress towards each of those goals. It will not only help you identify the most important goals but also gauge how to prioritize and accomplish them. You will also be able to better decide on realistic objectives to work towards and attach your goal to an appropriate time-frame.
Develop a System for Opportunities
When you are busy running a business, it can be easy to get bogged down with day-to-day tasks and problems. In the process of handling the here and now, the bigger picture gets pushed aside. It is important to develop a system for uncovering new opportunities that enable business growth. For example, the task of gathering data about trends in your industry should be an ongoing process. The next step is to then select the long-term opportunities you want to concentrate on, based on your data gathering and long-term goals. What markets do you want to explore? What new products or services do you wish to develop? These opportunities are now your long-term projects.
Explore Your Funding Options
Of course, no long-term financial planning is complete without exploring funding options for your business. For many small businesses, securing funding is one of the most difficult hurdles. Many entrepreneurs turn to their personal savings, credit cards, local bank or even family and friends to secure capital. Others opt to utilize alternative lending options that provide fast, flexible financing that does not add a burden of debt. One example would be invoice factoring. To avoid being unable to cover your cash flow down the road, it is critical that you have a plan for funding now. Between keeping tabs on your cash flow and knowing where to secure quick working capital, your business will be able to weather unexpected issues and seize new opportunities.
Security Business Capital’s Invoice Factoring Services
While access to traditional lending has improved in recent years, it is still difficult for many small businesses to secure funding. Even if the funding is available, the extended wait times for funding, strict requirements and added debt do not make traditional lending the most ideal option. Invoice factoring, on the other hand, is a cash solution that provides financial stability for long-term growth.
One of the oldest forms of business funding, invoice factoring, allows you to use outstanding invoices to generate cash quickly. To get started, your business sells its accounts receivable to a factoring company at a discount. The factoring company then quickly advances the capital you need against your unpaid accounts receivable. This cash solution is a very attractive option because your business is simply being given money it has already earned, allowing you to avoid taking on new debt.
Security Business Capital has built an experienced and dedicated team of individuals with years of expertise in providing flexible cash flow solutions that help businesses thrive. Oil and gas services, temp staffing, manufacturing & distribution, and transportation are just a few of the business types that use Security Business Capital’s invoice factoring services. To learn more about how services work, get in touch with us today for a free quote or consultation.