Importance of Financial Planning for Your Business

Proper financial planning can be a definitive point between a successful company and one that fails shortly after starting a business, so it is key to understand its importance.

In this regard, a survey estimated that among the factors that most concern entrepreneurs in Mexico, is the lack of preparation to manage their business with 36%. The foregoing is understandable, if you do not have a financial plan it is very difficult to determine the direction that a company can take, and that can generate an environment of inefficiency that affects the results.

What is financial planning?

This concept refers to a road map with a view to what you want to achieve in the future, correctly using the financial resources that a company has.

It consists of an administrative process where it is established and outlined how the economic resources are going to be invested and distributed, to achieve the defined goals, in the expected periods, whether in the short or long term, as you will see below.

It is something that applies both to startups, as well as to medium-sized companies and large companies, all of them should plan their finances in detail.

Types of financial planning

First, there is short-term planning, which regularly focuses on the management of business assets and liabilities, such as inventory, equipment, invoices receivable, by those who are considered assets, while by liabilities are the bills, expenses, and some business credit to be paid.

In the case of long-term planning, this focuses more on preventing adverse future scenarios for the organization, quantifying projects, calculating investments, and evaluating whether financing is required.

What characteristics does a financial planning have?

It must be a comprehensive, permanent and continuous process, aimed at making rational and informed decisions, promoting innovative changes by following a single direction of actions, among a series of possibilities.

Why is it relevant?

Because having the financial objectives well defined, as well as a line drawn to achieve them, results in achieving viability and sustainability.

With a good action plan, it is easier to make important business decisions, since the resources that are available are clearly observed and the possible use that can be given to them, as well as anticipating risk scenarios and identifying the growth opportunities.

Among the benefits of creating a financial plan are:

• Increase profitability.
• Eliminate unnecessary expenses.
• Reduce and control the level of debt.
• Develop strategies to manage risks.
• Contribute to the growth of the company.

General recommendations

In order to successfully achieve your financial goals, consider the following:

• Strategically analyze the business situation to find out what resources are available, liquidity, risk profile, among other aspects.
• Have strategies according to terms (short, medium or long).
• Review these strategies when putting them into operation, to know if they are going well or if adjustments need to be made.
• Have a business loan or a financial product that allows you to contribute to the growth of the business.

The MCA in your financial plan

In relation to this last point, a good financing that you can count on, since you have a very clear roadmap, is the MCA or cash advance.

With this financial product you will be able to have resources immediately, to cover your short-term goals and ensure future objectives. It is conveniently paid for with a percentage earned from company sales, and at an affordable up-front fee.

Approach Pymes Capital, request your MCA financing online, and enjoy the benefits of correctly managing resources to expand your business.