Financial Planning For Businesses: The success of the business lies in its effective Financial Planning. It is the reason why SMART (Specific Measurable Attainable Relevant and Time Bound) planning is necessary. There are various processes involved in the financial planning for an organization. A better financial planning for an institution can help achieve its long term goals, manage its resources effectively and tackle the risks associated with decisions wisely. Let us know about the steps involved in managing the financial planning of an organisation.
What is Financial Planning?
Financial planning is considered as the most significant aspect for the growth and success of the business. In simpler terms, Planning is a fundamental business decision which involves deciding in advance what to do and how to do it. It provides a roadmap for the financial future of the company.
Financial Planning For Businesses: Strategic and systematic financial planning helps the business to accomplish its objectives in an effective and efficient manner with the available resources.
Significance of Financial Planning for Businesses
Financial Planning For Businesses: As financial planning provides a structured methodology for managing organisation’s finances effectively, here are some of the key reasons signifying the importance of financial planning:
- Strategic Blueprint: A well framed and organised financial planning provides a Strategic guidance in order to align the financial goals with the overall business strategy. It offers a clear set of directions along with the roadmap.
- Risk Management: Financial planning facilitates in identifying the potential business risks and threats that the business may face. Also assists in analysing and developing the strategies to mitigate the risks.
- Capital Structure: Robust financial planning ensures that the business is having an optimum mix of debt and equity in its capital structure to finance the business requirements.
- Efficient Budgeting: Financial planning involves framing of detailed budgets and forecasts and helps in optimum utilisation of resources. It predicts the future financial scenarios including revenue, expenses and profits.
- Enhances Stakeholder’s confidence: A robust financial plan enhances the interests and credibility of the stakeholders, including shareholders, creditors, investors etc., by showcasing realistic and healthy financial reports.
- Projects Cash flows: A well framed model is established by FP&A professionals to present a realistic image of future cash inflows and outflows of the business by analysing business ratios.
- Reaching the Break- even point: Break- even analysis is a practical strategy used to make informed decisions by monitoring and controlling the costs incurred in the business. It is a point where Revenue earned exactly equals the Expenses incurred i.e., the business is in a no-profit no-loss situation.
Key Components Involved in Financial Planning
Let’s discuss the steps or components involved in Financial Planning For Businesses:
- The first and foremost step is to assess the current financial position of the business.
- Establish realistic goals and objectives that the business wishes to attain in future.
- Collect and analyse the information and decide the actions required to bridge the gap between where we are and where we want to be.
- Develop and implement the strategic financial plan.
- Monitor, review and re-evaluate the plan on a regular basis.
- Make use of the required resources at the required levels.
- Adopt corrective actions wherever needed.
Role of Technology in robust Financial Planning
Financial Planning For Businesses: With the rapid advancement in technology and development of Artificial Intelligence (AI), Machine Learning, and Blockchain, the financial world is undergoing a seismic transformation.
These technologies are making it easier for the businesses to strategically plan and reshape their finances.
Here are some of the trends widely used by the businesses:
- AI and Machine Learning– Artificial intelligence (AI) is getting prominence in analysing the vast amount of information/ data to identify the trends, predicting market growth and providing futuristic advice to the stakeholders.
- Cryptocurrency and Blockchain– These technology sources automatically adjust the investment portfolios of the investors considering the relative risks and returns and, therefore, guide in a well-structured financial planning.
Financial Planning For Businesses: Further, it is noteworthy that the benefits from these technologies are undeniable, but it has various potential concerns with respect to data security and privacy. Since, the sensitive information is getting processed online, there is risk of data theft and cyber-attacks. To mitigate this, it is important to adopt robust encryption and authentication measures.
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Along with the use of advanced technologies, it is essential to acknowledge that the human touch remains intellectual. There shall be the balance between technology and human expertise. Combining the both can lead to a more holistic and effective financial planning for the businesses.
Accumulation of Excessive Money is Pointless
Financial Planning For Businesses: In this technological era, society’s only perspective is to earn money. With the use of AI and other online investment platforms, people are chasing towards material wealth investing their crucial time there. This greed for name and fame has ruined humanity.
Is this the only purpose of such a precious human life? Do you remember Ravan, The King of Sri Lanka, he was the owner of a palace constructed full of Gold and after his death, he couldn’t take even a single gram of gold with him. This is the reality of life. This material wealth can give you a luxurious lifestyle but not the mental peace and happiness for what each one of us craves for. Kabir Saheb says in His holy verses:
Kabir, Yeh Maya Atpati, Sab Ghat Aan Adi |
Kis Kis Ku Samjhau, Kuye Bhaang Padi ||
Sant Rampal Ji Maharaj is Giving us the True Worship
After recognising the prime goal of this human birth which is salvation, it is important to know how one should achieve this. Sant Rampal Ji Maharaj from Haryana, India is the only Tatvdarshi Sant Who is bestowing us with the true method of worship from our Holy Scriptures as given by Supreme God Kabir approximately 600 years ago. He has given tremendous benefits to His devotees only by the power of His worship. Along with this He has revealed the secrets of Satlok and exposed Satan (Kaal Brahm) as well.
A person, who will read the book named “Gyan Ganga“, will come to know that we have forgotten our real home. That supreme peace and happiness we need is present in our real home Satlok, where there is neither birth nor death, no old age, no sorrows, no give and take of money. There everything is provided by God without any consideration and is indestructible. The way to get back to our real home is “Sat Bhakti” as evidenced from our holy scriptures.
Frequently Asked Questions (FAQs)
Q. What is the financial planning process?
A: The steps are: Setting Goals and Objectives, Collecting and analysing information, Develop and Implement a Strategic financial plan, Monitor, Review and Re-evaluate the plan on a regular basis.
Q: Who is a financial planner?
A: A financial planner is a professional who helps an organisation in attaining long term financial goals
Q: How important is financial planning in a business?
A: Financial planning provides a strategic roadmap for the future courses of action. It helps in accomplishing the goals of the business effectively and efficiently.
Q: How to prepare a financial plan for business?
A: The financial plan focuses on Budgeting, cash flow statement, Risk and Debt management and Tax planning.
Q: What is break- even analysis?
A: Break- even is a point where the business is neither in profits nor in losses. It determines how much revenue a business needs in order to cover all its expenses.
