When growing your business, the financial planning process is a constantly moving target. Surrounding various strategic financial plans based on a business’s current and future success is important. Therefore, creating and evolving a financial wealth management plan can be a time-consuming venture that can easily slip off the radar as an owner or manager concentrates on day-to-day operations.
However, financial planning is the backbone of securing your company’s future. It’s imperative to have many different types of financial planning in constant play to ensure stability as well as growth.
A financial planning service provider like Saddock Wealth is a key resource for tackling these essential but behind-the-scenes strategizing steps. First, it’s helpful to understand the different components of strategic financial plans and how they may change and adapt as your business enters new phases.
What is Financial Planning?
Financial planning is a multi-faceted yet comprehensive process that entails analyzing, organizing, and managing all financial components of a company. All these factors align with the business’s long-term goals.
Miles beyond simple budgeting or keeping track of expenses and invoices, financial planning is a big umbrella that covers everything from long-term exit planning strategies to routine budgeting tasks.
A Sample of the Key Types of Financial Planning for Business
Strategic Financial Planning
As the name suggests, strategic financial planning is a broad reference to ensuring that financial goals align with the overall objectives and operations of the business. This aspect of financial planning is focused on the future and may entail potential ventures like how to support sustainable growth and expansion. Also, it can include the best way to plan for an exit strategy for when it’s time to retire.
Investment Planning
Investments can help provide a safety net or a nest egg for businesses on the edge of expansion. In addition, this type of financial planning entails examining the different opportunities to strategically allocate funds to various assets, projects, or initiatives while providing a detailed analysis of the potential risks and rewards.
Daily Budgeting and Long-term Forecasting
Budgeting can make or break a business, and this type of financial planning ensures that a company has sufficient liquid funds to meet its immediate needs, and a safety net for changing market conditions. Forecasting takes budgeting a step further by predicting future financial performance and potential hurdles by examining past data and broader market trends.
Debt Analysis and Management
New businesses use this portion of financial planning to obtain funds from varying sources – such as investors or financial institutions – to foster long-term growth. Established businesses may benefit from finding opportunities to reduce debt as interest rates change or more liquid assets are available to pay off existing loans. Either way, debt analysis is a constant component of broad financial planning that changes as a business evolves.
Tax Planning
Tax planning entails a deep understanding of tax laws and regulations, available deductions and credits, and structuring budgets to defer or accelerate income in any given year. All these details add up to ensuring a business owner operates within the confines of the law while minimizing their federal and state taxes on an annual basis.
Operational Cost Planning
Operational cost planning is another evolving portion of general financial planning, as it is an ever-changing analysis of what it costs to conduct daily operations.
Optimally, business owners will uncover ways to save money throughout the lifespan of their company by finding opportunities to reduce production costs, overhead, and/or administrative expenses as they arise.
Succession Planning or Exit Planning
At some point, a business owner may want to enjoy the fruits of their decades of labor while ensuring the legacy of their business passes on to a new generation or provides the most profit possible for a comfortable retirement.
This is where succession and exit planning becomes essential. This aspect of financial planning ensures long-term peace of mind and that a business’s core values, and structure remain intact, even when the original business owner steps away.
Though the details of succession and exit planning vary, this type of financial planning generally includes creating a plan for leadership transitions, assisting with legal and financial considerations, and crafting a timeline to ensure the most benefits possible to the company and the company’s owner.
Saddock Wealth Can Help You with the Many Types of Strategic Financial Plans
Even established businesses with a clear accounting, budgeting, and bookkeeping system could benefit from a professional resource focusing on long-term goals. Reach out to the experts at Saddock Wealth and tell us about your business operations, pain points, and plans for the future. With an expert guiding the way and a strategic but comprehensive financial plan in place, your business can enjoy continued success for decades to come.