Every business owner knows that feeling of staring at their numbers and wondering if they’re making the right calls. Growth brings exciting opportunities, but it also means facing tough financial decisions.
Strategic financial planning means mapping out where you want your business to go and figuring out how to get there. It’s your roadmap for turning business goals into reality through smart financial management.
The trouble is, it’s so easy to get caught up in day-to-day operations – proper financial planning too often takes a back seat.
There’s always another client meeting, another project deadline, or another supplier to chase!
This guide explains how to create and implement a financial plan that works for your business.
Understanding your finances
Fueling growth means digging deeper into your numbers, which starts with good data. Start by consolidating your essential reports: recent management accounts, outstanding invoice reports, and your upcoming work pipeline.
Add your supplier bills and payroll figures to understand your full financial position. Together, these reports show your current position and near-term outlook.
You’ll want to focus on:
- Project profitability: Break down which jobs made money last quarter – include direct costs, allocated staff time, materials, and overhead
- Payment cycles: Calculate average days to payment after invoicing, identifying slow-paying clients and payment bottlenecks
- Resource allocation: Track monthly expenditure across categories – from wages and equipment to software subscriptions and training
- Future commitments: Monitor upcoming financial obligations, including regular payments and planned one-off investments
Modern accounting software such as Xero and Quickbooks makes this analysis more straightforward than ever.
The key is establishing a regular review cycle – perhaps the first Monday of each month – rather than scrambling for information when issues arise.
Building your budget
A budget determines what your business can achieve in the year ahead. The process starts with a thorough analysis of your management accounts, identifying key patterns in income and spending.
Your management accounts package forms the foundation of your budget. By analysing your accounts in detail, you can understand profitability across different projects, identify overhead cost patterns, and plan working capital requirements throughout the year.
Focus on these key areas:
- Project profitability trends and variations across different types of work
- Seasonal patterns in revenue and costs
- Working capital needs during different business cycles
- Common causes of cost overruns or project delays
Conducting periodic reviews helps track performance and adjust spending strategically.
Managing casflow
Cashflow management boils down to controlling the timing of money moving through your business. Without strong cash management, even highly profitable companies can fail.
Start by mapping your regular payment cycles. When do large supplier payments hit your cashflow?
What payroll costs come out each month? Which ongoing subscriptions and finance payments need covering?
Understanding these regular outgoings helps predict bottlenecks before they happen. From there, you can make your cash work harder:
- Invoice management: Create structured payment schedules for each project. Send invoices immediately when payment stages are reached, including all backup documentation clients need. Make payment methods and terms obvious on every invoice.
- Supplier agreements: Negotiate payment terms with key suppliers that match your project income. Consider early payment discounts – they can accelerate cashflow and stimulate fresh investment.
- Credit control: Set up automated invoice reminders. Call late payers early – the longer you wait, the harder collection becomes. Document every payment promise and follow up promptly if they’re missed.
Remember that growing businesses often need more cash, not less. Thus, managing cashflow is vital to prevent friction and bottlenecks.
Planning for growth and investment
Business growth demands clear thinking about money. Whether you’re considering new equipment, more staff, or bigger premises, each decision needs careful financial planning.
Base your decisions on hard numbers, not hope. What’s the real cost of each investment?
Factor everything: purchase price, installation, training time, ongoing maintenance. Then map out exactly how and when that investment will pay for itself through increased capacity or efficiency.
Key considerations for any investment:
- Full cost assessment: Include every expense from initial purchase through to running costs. Consider whether you need new staff, training, licenses, or workspace changes to make the investment work.
- Return calculations: Work out precisely how the investment generates returns. More capacity might need more sales to be worthwhile. Efficiency improvements should show clear cost savings.
- Funding choices: Compare different funding options – from cash reserves to asset finance. Look at total cost, including interest, not just monthly payments. Consider how funding choices affect your future borrowing capacity.
- Timing decisions: Plan investment around strong cash periods. Avoid committing to new costs just before traditionally quiet months.
Taking action
Strong financial management underpins every successful business. It’s not about complex spreadsheets – it’s about using financial information to make better decisions.
Getting this right means committing time to planning and monitoring. Set up regular reviews of your budget, cash position, and investment plans. Use your accounting software to automate what you can, but don’t rely on automation alone.
Talk to your accountant about setting up clear monitoring systems. They can help identify key metrics for your specific business and spot opportunities you might miss.
Ready to strengthen your financial foundations? Get in touch with the PBA Accountants team. We’ll help you build and implement financial strategies that drive real business growth.