Once a business is established and making profit, many founders will spend a lot of time thinking about growth. If this sounds like you, it’s time to get your financial planning sorted.
If your business feels like it's starting to outgrow its current operation and you’re ready to expand and generate more profit, congratulations. The next step is setting some solid growth goals – and making a financial plan to reach them.
In this guide, we look at the basics of financial planning, what to include in your financial plan and offer advice on seeking investment to grow your business.
UKBF partner Tide, which offers an award-winning small business account, sponsored this guide.
The business benefits of financial planning include:
Ideally, you’ll want to increase sales to existing customers, as well as take on new customers – you may also look at average sales per customer.
There is no exact template for a financial plan, as every business is different. However, there are some essential things to include.
Liabilities include things like debt and taxes owed. Assets are typically divided into three categories:
This helps to identify how much money you can expect to have at any given point, enabling you to plan your growth strategy and keep on top of any challenging periods.
UKBF member Mark T Jones advises business owners that cash flow projections are not about numbers in boxes, but rather the “thoughts, questions and research that goes into establishing those numbers”.
If you are seeking third-party investment to grow your business, sound financial planning is crucial. Investors want to see precisely how the money you are asking for will be spent – and how exactly this will facilitate growth. The clearer your financial planning is, the more likely investors or the bank will support you.
You can instantly and securely connect your business bank account to Tide and find out which loans you're eligible for with our pre-eligibility checks all without impacting your credit score.
Tide is fully authorised and regulated by the FCA, allowing you to connect external bank accounts to their services worry-free.
Click here to find out more about Tide.
If your business feels like it's starting to outgrow its current operation and you’re ready to expand and generate more profit, congratulations. The next step is setting some solid growth goals – and making a financial plan to reach them.
In this guide, we look at the basics of financial planning, what to include in your financial plan and offer advice on seeking investment to grow your business.
UKBF partner Tide, which offers an award-winning small business account, sponsored this guide.
What is financial planning?
Financial planning is the task of documenting your business's financial situation and determining the investment needed to reach your goals and objectives.The business benefits of financial planning include:
- Improving cash flow management, so you can reduce risks and take advantage of opportunities
- Helping you to make informed decisions about budget allocation
- Identify cost reductions and savings
- Demonstrating to investors that you have a plan to grow your business
- Developing an action plan to grow your business
- Nine tested techniques to help you set business goals that work
- Three questions to help you reflect on – and reach – your 2022 business goals
Potential growth goals for a financial plan
There are four main activities that can help you drive business growth. Start by looking at how your business is performing and what opportunities there are. We’ve included examples to help get you thinking.1. Increasing sales
Perhaps the most obvious way to grow a business is to boost sales. More sales results in bigger turnover and (hopefully) more profit.Ideally, you’ll want to increase sales to existing customers, as well as take on new customers – you may also look at average sales per customer.
- Free up more of your time to concentrate on sales or hire sales people
- Review the products each customer is buying and look for opportunities
- Invest in marketing
2. Developing new products and services
Developing new products enables businesses to diversify into new markets and niches, thus broadening their appeal to new customers and expanding reach.- Start exporting
- Invest in different types of production capacity
3. Increasing profitability
Reducing costs and increasing efficiency can boost profits and help businesses to grow; the greater your profits the more you can invest into the flywheel of growth.- Review your processes
- Invest in digital systems
4. Hiring and training staff
By taking on new staff and training existing employees, your business capacity can be boosted dramatically, thus facilitating growth.- Train staff involved in sales
- Hire staff that can facilitate growth, such as a marketing manager
What to include in a financial plan
When you understand the opportunity, it’s time to plan how you can take advantage of it.There is no exact template for a financial plan, as every business is different. However, there are some essential things to include.
Balance sheet
The first step of drawing up a financial plan is to create a balance sheet. This document outlines all of the business’s assets and liabilities, creating a clear picture of the financial health of the business.Liabilities include things like debt and taxes owed. Assets are typically divided into three categories:
- Current assets: Cash, money owed, stock and other liquid assets.
- Fixed assets: Land, property and equipment.
- Intangible assets: Patents, trademarks and copyrights.
Revenue forecasting
A key part of your financial plan is forecasting what your sales revenue will be for every month, quarter and year. This will help you identify patterns and enable you to make smarter decisions about when to invest in growth.Cash flow projections
Similarly, it’s essential for business owners to forecast how much money will be flowing in and out of the business every month, quarter and year.This helps to identify how much money you can expect to have at any given point, enabling you to plan your growth strategy and keep on top of any challenging periods.
UKBF member Mark T Jones advises business owners that cash flow projections are not about numbers in boxes, but rather the “thoughts, questions and research that goes into establishing those numbers”.
Why is financial planning important?
Having a clear picture of your business’s financial health and what the future looks like helps you to set realistic goals – and how to achieve them.If you are seeking third-party investment to grow your business, sound financial planning is crucial. Investors want to see precisely how the money you are asking for will be spent – and how exactly this will facilitate growth. The clearer your financial planning is, the more likely investors or the bank will support you.
Are you seeking investment to grow your business?
If you’re seeking investment for your business, Tide enables you to search for tailored business loans without impacting your credit score.You can instantly and securely connect your business bank account to Tide and find out which loans you're eligible for with our pre-eligibility checks all without impacting your credit score.
Tide is fully authorised and regulated by the FCA, allowing you to connect external bank accounts to their services worry-free.
Click here to find out more about Tide.
