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Maintaining Control over Your Finances |
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Maintaining control over your finances is one of the most critical aspects in business. If you don’t know how much money you have to spend, how can you make meaningful business decisions? And how can you concentrate on running your business if you have to worry where the money is coming from to pay your bills on the 20th?
Financial Planning
Most proprietors have tried to set up a budget for their business, but experience quickly shows that reality and budget often have little in common. We develop financial plans for our clients that are based on how the business works and what the proprietor wants to achieve.
They are effectively a model of your business. Income and expenditure calculations are linked and allow quick changes to the financial plan. You can investigate and compare different scenarios, test different assumptions and document your expectations for the next year based on a defined set of assumptions.
Monitor Progress
The issue then is to regularly review how your actual performance compares to the financial plan. If you find significant difference between your plan and your profit and loss, you review the underlying assumptions and make the necessary changes, either in the financial plan or in your behaviour.
And you don’t have to redo the budget every time. Making changes to some of the assumptions will automatically reset your financial plan as long as the underlying model is correct. And if the model proofs to be wrong, you want to look at your business in a hurry ….
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