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How the Different Stages of Financial Planning Helps You Out

finance

How the Different Stages of Financial Planning Helps You Out

Different Stages of Financial Planning Helps You Out

Have a desire to make a hobby your own business? Or do you already have your own business, the income from which you would like to increase? You can use financial planning tools. The ability to use them will help work more efficiently and earn more, qualitatively increasing your own productivity.

7 stages of financial planning

Operating cycle

Using the operating cycle, depicting it in the form of a simple diagram, you can clearly see how much time you spend on each of the stages of work. When building it, it is necessary to draw a straight line for each process, indicating the beginning and end. By depicting in the form of such segments all the processes carried out in production, and placing them in chronology, you can see what exactly in your work should be done in parallel or more quickly.

Counting turnover

The basis for financial planning can also include a procedure for counting working capital. These are the funds that need to be invested in the production and sale of your product, as a result of which they have to go back and make some profit. At first glance, it can be decided that the working capital here is the original one hundred thousand. It turns out no. After all, until they return to you, it will take another time for which production should not stand idle. You can turn to Go4rex for this act.

Sales planning for the year

First, decide how much you would like to earn during the coming year and how much goods / services you need to realize. Here will help both their own experience and the advice of experienced comrades in the case. You can also focus on your own competitors. Be sure to refer to the previously created operational cycle.

Monthly expenses

For a start, it would not be superfluous to plan permanent expenses, such as: the cost of renting premises, utility bills, workers’ wages, and so on. Then it is necessary to analyze the variable costs: materials, advertising and the like. After the above, you need to decide whether you are expecting major expenses in the coming year. These include the purchase of equipment, the production of additional repair.

Seasonality

The essence of financial planning also lies in the ability to quickly focus on non-permanent factors. One of these factors is seasonality, that is, a periodic change in the magnitude of demand depending on the season of the year, weekends, holidays, and so on. Seasonality is not alien to every type of business. It is necessary to take into account all possible factors and be ready for them.

Different Stages of Financial Planning Helps You Out

Three business scenarios

Financial planning tools also include the development of three own business scenarios: pessimistic, realistic and optimistic. In the first case, it is necessary to analyze what you can do in case of a sharp drop in demand for a product or service in order to return to satisfactory performance. In the second, how exactly can you improve your own business results with its stability. In the third – will you be ready in case of a crazy demand for the products you offer and whether you can satisfy all potential customers.

Calm analysis

Previous financial planning steps are completed, the machine is running. There is the last stage – the seventh. After your business has successfully worked for about a month, you can answer the following questions for yourself:

In the case of both growth and a drop in the level of earnings, it is worth analyzing what caused the changes and what can be done to improve the results.

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