It is better late than never; the same goes for financial planning.

As the end of the year is approaching and a new year is about to begin, it is the right time to rethink ‘what is financial planning for a business’ as well as for all the personal expenses. Redesigning how it was done for this year and how it can be done better for next year in a more reformed way is something that needs to be worked upon.

The October financial planning month 2020 can be the right time to plan to do something new or plan to do something differently. Everybody has the right to hold their financial future, so it is time to get proactive and start planning.

Steps to plan finances

With the onset of the October month, all the businesses enter into the financial literacy month. Following types of financial planning can help one gain better results and help achieve financial goals –

1. Evaluating business finances

Looking at the past six months, many business people have learned that financial planning is not a luxury but a challenging task. It is imperative to set priority goals when it comes to remaining financially stable during crises. To hold a solid plan at such times that includes savings is critical in an emergency.

Designing an established baseline budget based on business history by reviewing balance sheets, income statements, cash flow, and owners’ or stockholder’s equity is one of the best ways to reform business goals.

Tracking all the expenditures, revenue, profit margin, liabilities, and assets can help know the numbers. This will help to improve in areas such as a need to increase investments or decrease spending.

Outlining a solid baseline for a business can help determine the time of interval these financials needs to be evaluated, such as monthly or quarterly. It depends on the business type to identify what works better, short-term goals, or forecast for the annual year.

2. Setting goals

Setting up goals is like designing a roadmap for the business, and a detailed personal budget can help business owners successfully implement their plans.

Short-term goals like increased revenue, entering new markets, and expanding presence are essential for growing business. Similarly, long-term goals are also necessary. It lets business owners gain peace of mind and a competitive edge to receive great values if a situation comes up to sell the business.

As every drop counts, the efforts are rewarded in the long run or at the time of an emergency.

Here are some important questions for which timely answers are required to set goals – When to plan a retirement? Who will take over the business?

Getting answers to the above questions beforehand is termed as succession planning. It will facilitate a smooth transition for managers, staff, customers, and vendors.

An important piece of saving for retirement includes the accumulation of savings. This can be incredibly challenging for business owners, as some may not always take home a regular paycheck and frequently see their income vary.

The necessary part of the savings for retirement includes the accumulation of savings. It may seem challenging, especially for business owners, due to irregular income. But setting a savings goal and coming up with a formula to reach it is essential.

3. Keeping track of the budget

The objective of financial planning also includes keeping track of the budget. Small business owners often consider drawing a credit line for their financial terms while they are doing well. But during a time of emergency, it may become difficult to get these funds approved.

The overall budget of an organization reflects its values and priorities. Spending time and thought on financial resources will ultimately lead to where one wants to reach. The primary driver for business continuity is consistent cash flow. Ensuring a pipeline and even automation for payments can be a treasured part of a business’s financial plan.

4. Focus on financial literacy

Successful business owners can use the strategy of breaking down factors that make their business run efficiently. The factors include time taken to complete tasks, employee value, and the most profitable services and products. Thus, business decisions are based on this information that ensures their focus is on areas resulting in time well spent and resources allocated to maximize profit.

Financial literacy goes beyond the fundamentals. However, it’s important to consider market demand and pricing. To ensure that timely payments are made to government agencies to escape fines and to take advantage of any potential opportunities to minimize tax liabilities, basic knowledge of tax laws is important.

As October month is a national financial planning month, practicing these concepts every month can help business owners reach their goals and reduce their financial burden.

Apps that help plan budget

Maintaining an app that keeps track of your budget can help plan finances systematically. Following is the list of some user-friendly apps that can prove useful for managing finances –

1. Mint – Mint tops in the budgeting app list due to its variant features, such as automatic updates categorizing transactions that give a clear picture of spending in real-time.

With this app’s help, users can track their bills, add their categories, split transactions, and set budget goals that alert them when they exceed their spending limits. It also facilitates the monitoring of credit scores and provides free credit scores.

2. PocketGuard – PocketGuard lists the most important thing that many users want to know – how much money they have for spending. It reflects the remaining balance of how much money is available after accounting for bills, spending, and savings goal contributions.

Users can quickly get to know how much money is left “in my pocket” for the day, week, or month. It helps users track specific categories of spending for more details —like groceries, clothing, or eating out.

3. Clarity Money – Clarity Money is a comprehensive budgeting and saving app. It lets users link financial accounts from thousands of institutions, track spending, organize expenses, and bucket their spending into different categories.

The other features include subscription canceling and credit score monitoring, giving a more inclusive financial picture beyond just transactions.

4. You Need A Budget (YNAB) – ‘You Need A Budget’ is famous for providing quality budget management tools while making its users more conscious of where their money is going. Thus, it improves by integrating bank synchronization and more flexible input options for users’ financial information.

The app also includes articles and resources that educate users on strategies that further develop their financial management skills. YNAB doesn’t just aim to manage funds, it also lets users turn into an overall better money manager.

Toward the end

Determining the scope of financial planning is important to set benchmarks along with short-term and long-term goals. It helps to estimate the amount of money likely needed to meet retirement and health care expenses. A healthy financial plan can help to step down from businesses or exit a career with confidence.

Measuring present financial situations helps track where you are in terms of your assets and liabilities, the gap between where you are financially and where you would like to be.

Emergency planning may also suggest partnering with a financial institution to secure a line of credit during good times. Accessing it only when there is a need to fruition is a way to ensure the future and a needed savings account.

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