A solid financial plan is essential for the success of any business. It provides clarity, direction, and the stability needed to navigate challenges and seize growth opportunities. Inesa Murasovaite, Financial Accountant at Gallagher Keane, shares her expert tips for building a strong financial plan for small to medium-sized businesses.

1. Start with a Clear Budget:

One of the first steps in creating a financial plan is developing a clear and detailed budget. This means identifying your expected income and all of your operating expenses, such as rent, wages, utilities, and inventory costs. By understanding where your money is coming from and where it is going, you can make informed decisions about where to allocate your resources most effectively.

Inesa’s tip: Review your budget regularly. It should be a living document that you adjust as your business grows or as unexpected expenses arise.

2. Set Realistic Financial Goals:

Goal-setting is a crucial part of your financial planning process. Outline both short-term and long-term objectives for your business. These could include targets for revenue growth, profitability, or achieving specific milestones, such as expanding your product range or entering new markets. Setting clear, measurable goals will help you stay focused and guide your financial decisions.

Inesa’s tip: Be realistic with your goals. Overly ambitious targets can lead to disappointment, so aim for achievable objectives that align with your business’s current capacity.

3. Create a Cash Flow Forecast:

Cash flow is the lifeblood of any business. A cash flow forecast helps you predict when money will come in and when it will go out, so you can plan for any shortfalls or surpluses. By projecting your inflows and outflows over a period of time, you can make sure your business stays solvent and avoids any cash crunches.

Inesa’s tip: Consider seasonal fluctuations. Many businesses experience seasonal variations in sales, so it’s important to plan for these changes to avoid potential cash flow issues during quieter months.

4. Keep Track of Key Financial Metrics:

To assess the health of your business, it’s important to keep an eye on key financial metrics, such as your profit margins, return on investment (ROI), and debt-to-equity ratio. These indicators can help you make strategic decisions about expanding your business or cutting costs.

Inesa’s tip: Don’t overlook small details. Even minor discrepancies in your financial metrics can be a sign of bigger issues down the line, so always stay on top of the numbers.

5. Plan for Taxes and Unexpected Costs:

Every business must account for taxes, and failing to plan properly can lead to penalties and fines. Additionally, unexpected costs can arise at any time, from equipment failures to legal fees. Build a buffer into your financial plan to cover these potential costs.

Inesa’s tip: Work with a financial advisor. Consulting with an expert can help ensure you’re not missing anything when it comes to taxes or unforeseen expenses.

6. Review and Adjust Regularly:

Building a financial plan isn’t a one-off task. As your business evolves, so should your financial plan. Make it a habit to review your financial status regularly, particularly when you hit major milestones or face new challenges.

Inesa’s tip: Stay adaptable. Flexibility is key in today’s fast-paced business environment. Keep an eye on changing market conditions and be ready to adjust your financial plan as needed.

A strong financial plan doesn’t just help you manage your finances, it gives you the insight you need to drive your business forward with confidence. At Gallagher Keane, we work closely with small to medium-sized businesses to help them create customised financial strategies that support their success.