When starting a small business, it’s easy to find yourself swept up in all the excitement of a first sale or a new customer. After all, your first thoughts probably go to growing your business, building an audience, or developing new products and services that can pad your bottom line. In other words, your small business financial plan may not be at the top of your mind.
However, while these are all integral components of a successful business, small business owners must also wrap their heads around their finances. Financial planning for small business owners may seem complicated, but with a few key insights and helpful software tools, it doesn’t have to be.
The basics of financial planning
What is financial planning in business, and how can you leverage it to boost your bottom line? A financial plan maps your current finances and how you want them to grow. It typically includes information about your company’s income, expenses, balance sheets, investments, insurance, etc.
The more prepared you are for your business future, the more successful you will be. Careful financial planning can reduce surprises and help you pursue actionable financial goals. Though these can vary from business to business, six critical elements of any successful small business financial plan exist.
Set data-driven goals
From expense management tools to time tracking and reporting, you can leverage your existing data to set realistic, achievable goals for your business’s financial health. For example, sales data can help service- or project-driven companies determine how to allocate resources while developing timelines and project estimates.
Time tracking can help you allocate your workforce and develop growth plans for your staff and brand. When setting goals for your business finances, ensure you have the appropriate data to back them up.
Allocate your budget based on specific needs
Too often, small business owners develop their budgets based on feelings and intuition instead of specific, realized needs. Unfortunately, this can mean short-changing particular budgets while inflating others, making it difficult to balance your small business financial plan.
Some of the most significant expenses for many businesses are staffing, taxes, and materials. You should use your existing knowledge and incoming information to allocate these portions of your operating budget more accurately. Then, with more robust budgeting in mind, you’re well on your way to achieving your business finance goals.
Reduce unnecessary costs
One of the most critical components of financial planning for small business owners is cutting unnecessary spending. Which services are your most profitable? Which types of projects are dragging down your bottom line? Through careful financial planning, businesses can streamline their processes and eliminate aspects that aren’t pulling their weight.
You can use time-tracking software to see where you’re overspending on labor and adjust your schedules accordingly. You can also review comprehensive expense management tools and detailed reporting to get more precise insights into where you’re spending too much and where you could save money. Reducing unnecessary costs can help you develop a financial safety net if something goes wrong within your operations.
Understand your projections for the future
Specific projects and careful future planning can help you navigate even the roughest bumps in your small business journey. When planning for your brand’s future, you must consider common budgetary hurdles like growth, expansion into new markets, fresh product releases, and increased staffing needs.
At its simplest, your small business financial plan can include some of your data-driven goals alongside a future timeline by which you aim to hit specific milestones. You can also get more detailed and complex with future projections, including expansion goals, funding opportunities, and market launch plans.
Even if you’re not developing a more aggressive growth plan, you should know what your business could look like in six months, a year, and two years. By setting realistic, firm projections for your brand’s future, you can develop a more robust small business financial plan to help you remain agile as you continue growing.
Develop a recovery plan
Every business goes through the occasional hardships, whether it’s a product launch that didn’t take off or a slow sales period. It’s how these businesses bounce back that matters. In these cases, financial planning for business owners must include an effective recovery plan that details how you’ll power through a slump or retool a lackluster product.
One significant component of any recovery plan includes your approach to risk management. While it’s unlikely that you can develop a business finance plan that addresses every potential risk you may face while running your brand, you can identify some of the largest ones and implement safeguards that will help keep you operating. These tasks include understanding how to navigate loss and theft. You may also want to consider a few cash flow contingencies in case of revenue drops, weaker launches, or other financial shortcomings.
Constantly monitor your time utilization with the right tools
Time-tracking software is one of the easiest ways to see where you are and aren’t meeting your financial benchmarks within your business. Are you overstaffing slow periods and spending far too much on labor costs? Are you understaffing your busiest days, negatively impacting customer satisfaction, and missing out on sales opportunities? While we often think of labor scheduling as a way to overspend, it’s always possible to sell yourself and your employees short.
That’s where well-implemented time-tracking software and business analysis tools can play into financial planning for small businesses. With time-tracking tools, you can more accurately see where you’re spending on labor and compare that to economic data to ensure that money is well-spent. By doing this, you can more thoroughly staff key shifts and reduce coverage on days where it might not be as beneficial to have multiple staff members coordinating operations.
Work with Elorus to make small business financial planning more intuitive.
Ready to take control of your small business financial planning? Elorus is here to help. Elorus provides all-inclusive business software that encompasses time tracking, reporting, and expense management so you can more clearly spot opportunities and risks within your existing business finances.
In a few quick steps, you can use the Elorus platform to price your services more accurately, develop clear time-tracking metrics, and review business reports that give you more granular insight into your overall performance and financial health. The best part is that you can do this all in one place without paying for piecemeal software tools or disconnected platforms.
If you’re looking to save time and money within your small business without sacrificing data, insights, or performance cues, Elorus has you covered. Sign up for free today to learn more about the Elorus platform and get started. We’ll be happy to guide you through our software and help you understand how we can help streamline financial planning for a small business.