For many, 2020 was a harsh awakening to the importance of Financial Planning and Strategy. I mean really, who saw that coming? We suspect that because of this; future trends in financial planning will begin to include variables such as unforeseeable circumstances and the importance of diversity in your income streams. The goal of an average business has always been to pay:
Although this model has worked on the surface in the past, traditionally it does not accommodate for unforeseen circumstances or variables that affect the financial market. We can all remember how the economy was impacted by 9/11 and the long lasting effects of the Housing Market Crash. How did you and your business learn to better protect yourself from unforeseeable events such as those? Did you make any changes at all or just cross your fingers and hope that didn’t happen again? And then it did, in a way that no one saw coming...
The point is, by setting up a good financial Strategy, you will position your company to weather the toughest of storms. Here are a few questions to get the ball rolling to make sure that you are prepared when nuclear zombies invade or a meteor strikes the earth;
What is your debt to asset ratio?
Do you operate based on a surplus of supply vs demand?
Do you have two months worth of payroll set aside?
Have your leveraged cost saving opportunities and initiatives to lower your overall overhead costs?
How much do you set aside in anticipation of your tax liabilities?
What percentage of your sales do your spend/invest/save?
By having a Financial Plan in place, you will give your organization the best chance to succeed from a secure position of financial freedom that will foster accountability and enable strategic growth well into the future.