Why Having a Financial Plan is Important for Small Businesses
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Why Having a Financial Plan is Important for Small Businesses

Every business owner should create a financial plan. It serves as a road map to your goals and a reminder of why you started your business in the first place. It’s easy to put long-term planning on the back-burner when your focus is on the daily operations of your business, but lack of a financial plan is the quickest way for a business to fail.

Most businesses experience fluctuation in sales depending on the time of year. The financial plan you develop can help you properly manage cash flow and ensure that you have a cushion when business is slow. It will also allow you to identify what’s working as well as if there are any problem areas. If your plan shows that revenue is lower than projected, it allows you to shift focus to marketing and promotions.

Having a plan also makes getting funding easier. Knowing what shape your business is in financially and having a realistic business projections are necessary for you to know what type of funding options are appropriate and feasible. You need to be clear about your goals and objectives. Nothing is worse than getting funded and mismanaging the money. Your plan should also build in funds for both the expected and unexpected expenses like taxes, emergency repairs, and equipment upgrades.This process becomes easier if you consult a financial advisor. A solid plan can allow you to find trends in the market, keep you competitive with other companies in your industry, and assess your progress.

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