You never know what’s in store for your business in the new year. 2017 can present you with really good opportunities or threats for your business. Therefore, you should be prepared for what comes your way and thus, create a suitable plan to take advantage of opportunities and overcome any risks. One way to be prepared is to create a financial plan. Financial planning is important because any unforeseen events that affect your business can have a direct impact on your finances. So if you have not planned your finances for this year, here’s what you need to do.
Update the information
Before you begin planning your finances, keep yourself updated with the latest happenings in the business environment and also within your company. This includes analyzing your competitors’ strategies, evaluating of your marketing costs, settling transactions and others. Once you are aware of this information, it serves as a guide to planning for your finances.
Estimate your expenditure
You need to decide the amount of funds you will spend in 2017. A periodic estimation on a monthly or a quarterly basis is suggested. This is because in case you happen to overspend in a month, then you can control the spending for the upcoming months. As a result, you are able to keep control on the amount of money that you spend. Moreover, you need to decide how much funds need to be allocated for different departments within your company. For this purpose, you need to consult the heads of all the departments in your company.
Estimate your revenue
Once you estimate your expenditure, you need to decide how much profits you expect in the year. For this purpose, you should figure out the sources of revenue. Accordingly, you may consider your investment options, increase the prices of your products, reduce the discounts offered, and others.
Update on tax policies
Ensure that you are aware of the 2017 changes in tax policies. There may be some tax benefits that you can avail by investing in specified portfolios. Accordingly, you can decide in advance where to spend or invest your finances to get the benefits. If you are not well-versed with tax matters, then take the help of a professional tax consultant.
Check the latest salary guide
Check the latest industry salary guides to determine increment for your employees. Moreover, you can compare your pay structure with industry standards and alter your salary structure while recruiting new employees or providing incentives to the existing employees. Thus, you need to make sure that you have sufficient funds available if you need to increase their salaries.
Keep contingency funds
Risks are a part of every business, therefore; you need to keep aside a specific amount of funds in case of an emergency. Contingency funds should be able to keep your business running for a few months. If you do not have sufficient funds to handle a crisis, then loans or borrowing are your best options. Therefore, when you plan for your finances, do not forget to create a reserve account for your business.
When you carry out your financial planning, follow these points to ensure you do not miss out on anything. Good financial planning ensures that your operations run smoothly and you do not face any cash flow problems. If you need more tips on managing your finances, then get in touch with an expert accounting firm in Edmonton.