Many small businesses and startups in Atlanta lack a sound financial plan that could help them achieve long-term success and growth. Nonetheless, developing a financial plan for your business isn’t as easy as it may sound. You’ll need to create an overview of the business’s financial status while projecting growth.
Therefore, the best way to develop a financial plan that could work for your business is by hiring CFO services in Atlanta, GA. However, being familiar with some key elements of a successful financial plan will allow you to work closely with your CFO.
Key elements of successful financial planning:
The following are the key elements of successful financial planning.
Sales forecasting
It is prudent to estimate your monthly sales revenue, which can be calculated based on historical sales figures and market trends. A CFO can make sales forecasts, which can help you observe the patterns in your sales cycles. Sales forecasts can also help you plan marketing initiatives and strategies based on product, customer, and geographic segmentation.
Expense planning
An expense plan considers fixed costs like rent, salaries, utilities, etc., and variable costs like marketing and raw materials. With the help of a CFO, you can create an expense plan to allocate a budget for each expense category. Expense plans also involve implementing cost-saving measures, which can integrate with the overall budgeting and forecasting.
Statement of assets and liabilities
The CFOs can create a statement of financial position involving a list of all the business’s assets and liabilities, such as cash, property, inventory, loans, accounts payable, accrued expenses, etc., and carry out the net worth calculation, which is a part of the statement of the company’s financial position. Evaluating liquidity and solvency ratios for assessing financial health is also a part of this statement.
Cash flow projection
Projecting cash flow involves estimating and anticipating cash inflows and outflows, such as sales, investments, expenses, loan repayment, etc. The process also involves identifying the difference between recognizing revenue and receiving cash. Cash flow projection implements cash management strategies that enhance liquidity while reducing risks.
Operation planning
The operation plan involves setting clear goals per the overall strategies, which a CFO can quickly pan out. It also involves detailed planning of production, procurement, and distribution and allocating resources like man, money, and materials.
Break-even analysis
Break-even analysis calculates variable costs and fixed costs per unit produced or sold. Calculating the contribution margins per unit and the total is essential to support pricing decisions and cost control.