Lot of efforts are taken to develop company’s growth strategy but seldom due attention is given to the finance strategy. Suitable finance strategy is cornerstone for the success of company’s growth strategy.
CFOs need to understand the need to have a financial strategy that connects to organizational goals and focuses on the key attributes that will allow the finance function to be successful in the future. In short, there needs to be alignment of financial strategy with company’s growth strategy.
A detailed business plan is the company’s crystal gaze into the future and is a quintessential navigator on the growth journey. CFOs can help build realistic and thoughtful business plans. Effective business planning will determine what business success looks like, and what needs to be done to achieve it. Once a plan is set for business, a look at the numbers will provide the financial results that the business wants.
Next, it’s important to prepare a budget based on the business plan objectives. For example, if you’ve decided to increase your sales, this could mean extra staff, stock and/or increased marketing. You’ll need to prepare a budget that shows not only increased sales, but the increased expenses required to achieve the increase in sales.
A budget is the financial strategy for your business. If made thoughtfully, for startups, business plans could double into budgets or targets as well. Business plans could also help consider pricing and other decision scenarios.
Once a business plan is made, CFOs role is to keep an eye on the assumptions vis-a-vis the reality and continuously keep it real and current. A business plan should be a living and breathing document. As your business environment changes, the plan’s actions and strategies should evolve and adapt on a periodic basis.
What has been your experience with business planning or budgeting?
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