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Developing a financial plan for a small business
Stanbic IBTC team
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While a business plan defines what you want to achieve and how you plan to achieve it, your financial plan is a complete financial picture of your company, including planned income, estimated balance sheet, and cash-flow projections. Read our simple guide to a business plan here

Small businesses should take the time to do a financial plan at least annually. The plan helps the business owner to better manage cash flow by preparing for situations that could result in cash shortages, such as seasonal fluctuations in revenues.

Here are a few steps to take into consideration when developing a financial plan for your small business:

• Convert your marketing tactics into expenditures:
The tactics of your marketing strategies depict the course of action you want to take. Do a cost estimate for each tactic.

• Create a revenue model:
Determine the assumptions you want to use for key business variables such as unit sales, number of customers, and prices for your products or services. Calculate month-by-month revenue projections using the assumptions.

• Forecast the cost of goods sold:
Use your historical ‘cost of goods sold’ percentage as a guide and modify it based on any changes you anticipate in the cost of materials, finished goods, or production costs.

• Forecast general and administrative expenses:
Project your expected facilities costs such as rent, utilities, insurance, or recurring legal expenses. Again, use numbers from previous years as a guide but make sure you allow for increases that may occur.

• Prepare a personnel expense forecast:
This simply means to plan for the cost of people you’ll need and include additions that will be needed to carry out the strategies you’ve devised for the upcoming year.

• Forecast business upgrades:
You have to be sure to estimate the costs of any improvements you want to make to the business in the future. These could be equipment purchase, facility expansion or renovation.

• Review and finalize the financial plan:
A financial plan forms the core of your overall business plan. Financial planning should be completed at least once a year and revised monthly to incorporate actual results.

Preparing your financial plan gives you the opportunity to review all expenditures you made the year before and determine if there are any potential savings that could be achieved through greater operational efficiency or switching to lower cost supplies.

At Stanbic IBTC Bank, we are willing to support businesses that show the right discipline needed to succeed. You can visit our nearest branch and discuss your financial and business plans with the business banker at the branch.

For more information please tweet at us @StanbicIBTC or send us a message on Facebook -