Creating a Financial Plan for Your Business: 5 Important Steps to Follow
Whether you are starting a new venture or you are running an existing business, it is important to plan your finances. It will help you in forecasting the future performance of your business and will guide you in overcoming the monetary challenges that you will face. As the owner, it is ideal that you are knowledgeable of the important aspects involved, even if you will be working with an accounting firm in creating the plan.
To provide you with guidance, here are some of the important steps to follow:
Identify Your Business Goals
You must focus on the goals and objectives that you want to achieve in running your business. These will be used as your basis in creating the financial plan. You should be able to provide quantitative figures such as projected profit in a three or five-year period.
Create a Revenue Model
Create assumptions on the key variables for revenue acquisition. These should include expected number of clients, daily unit sales and prices of your products or services. You should be able to compute a monthly forecasted figure for total sales and compile it in a one-year period. Do not forget to make the necessary adjustments on different scenarios that can reduce or increase your revenue to imitate a realistic business operation.
Estimate Your Taxes
Work with a professional, such as a Gibraltar taxation expert or an accountant, to determine how much tax you are going to remit to the government for your yearly operation. This will allow you to create a realistic projection on the total profit that you will receive for a certain period of time.
Forecast All Your Expenses
You should look into all the possible expenses that you will incur in running your company on a certain period. If you are forming a new business, you should start with the start-up costs. But if you are running an existing venture, you should go straight to calculating the financial resources needed to hiring people, procuring supplies and equipment, future business upgrades, and your day-to-day office expenditures.
Compile All the Numbers
Compute all the estimates that you have made to find out if you will be able to meet your business goals. Deduct all the projected expenses, along with the estimates on government remittances provided by a Gibraltar taxationexpert, from your forecasted amount of sales. This will give you the total profit that you can make in a month, provided that your estimates are realistically attainable.