Financial Strategies in a Business Plan

Financial Strategies for Small Business in Houston

Cash Flow Management. -

The income statement and balance sheet of a business may look great on paper, but if the cash is not properly managed, the small business can quickly go under. Part of the financial strategy of the business plan will detail how cash will be used in the business. This includes identifying an amount that will always be in reserves as well as how major expenses will be paid. By laying out the financial cash strategy ahead of time, it will make financial decisions easier about when to write a check and when to access a line of credit during normal business practice.

Purchases. -

Any purchases made through the business, particularly large purchases, should have detailed guidelines in the business plan. This will determine which purchases will be made with cash, a line of credit and with a credit card. This strategy will also outline taking advantage of the terms of suppliers. For instance, if a supplier offers 45-day terms, the business will wait until the end of the term to make a payment. In addition, the purchasing strategy should specify if approval is needed by a manager or board for purchases over a certain amount.

Collections. - 

If the business is not properly managing its own receivable, it can be devastating to the financial health of the business. The financial strategy should detail the collections plan. This may include dedicating in-house staff to following up with overdue customers or turning them over to an outside agency. It will also specify late fees and if deposits are due before products and services are delivered for new customers.

Investments. -

Although a specific investment strategy may not be able to be detailed in a written plan, general guidance should be given to management. This includes a percentage of money invested in high-risk portfolios vs. lower-risk portfolios. The investment section of the plan will also include guidelines of when approval is needed to make changes to current investments or to liquidate investments to cover business necessities.

Considerations. -

The financial strategy of a business plan should be a general guide. While some specifics, such as approval authorities can be outlined, it will be difficult to account for every possible financial scenario that may arise in the business. However, the financial strategy should be enough of a guideline to direct the basic staff of the business in conducting the financial aspects of the business from paying for purchases to making payroll.

Source: SmallBusiness

Patty Block, President and Founder of The Block Group, established her company to advocate for women-owned businesses, helping them position their companies for strategic growth. Charting the course for impactful, sustainable, profitable businesses, the beacon is control: of your strategic direction, your money, your time, your staffing, and your ability to bring in business. The Block Group brings together the people, resources and ideas that build results.

Financial Strategies for Small Business in Houston.

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