“A good financial plan is a road map that shows us exactly how the choices we make today will affect our future.” – Alexa Von Tobel
Good financial planning is a vital requirement of starting a business and has complex aspects, particularly in the cash flow projections.
Tax, VAT, payment terms, debt collection, projections and credit ratings amongst others are all areas where expert opinion and assistance is most advisable.
However, there should be equal emphasis on the business owner really understanding the nuances of the financial plan themselves. An expertly (externally) created plan is much less valuable than one where the business owner properly knows precisely what they need to do to deliver it.
You have probably seen the famous dragons den team dishing out the scorn and mocking any prospective entrepreneur seeking funding when they don’t actually ‘know’ their numbers! But more than this, it is a legal issue too – as the business owner, any failing to properly conduct the business is your legal responsibility and so, ‘knowing’ your numbers is something essential to all businesses.
A professional advisor who can translate and explain the more technical side of financial planning is much more valuable than a mathematical and technical approach. Ultimately, you need to take responsibility for your business and its financial performance.
Create your financial plan over differing time scales, cash flow may be fine on an annual basis but a disaster in the middle. Take professional advice and support but ensure you understand, ‘know’ and own your financial planning and numbers.