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It’s important to follow what you want in life. When you’re not happy, it’s important to allow transformation to your new business. However, how do you achieve that?
Well, it turns out financial planning might be the perfect vessel; not only can it help you to be accountable for growth, it can also help to guide you away from your current business – and out of your comfort zone.
What is financial planning in business?
Financial planning in business is a process that takes into account all the financial aspects of your business. It includes the production of budgets, forecasting the company’s future, and making plans to meet that future. It ensures that your business is on track to achieve its goals and provide for financial stability.
The most important aspect of this process comes from knowing what risks you are or might be taking by doing something in your business, how those risks will affect your company in the long-term as well as financially, and then making changes to ensure success.
How can financial planning help business change?
If you’ve been around business for a while, or been involved with coaching or a personal trainer, you’ll know that you should always aim for some improvement. If you make £500k this year, aim to make £550k next year. If you run 1500m in 3:23 today, aim to do it in 3:21 next time. It doesn’t matter if it’s 1% improvement, or 10%, you should just look to improve.
Financial goals can be fantastic for allowing you to grow slowly, and with clarity, and I always recommend that businesses have financial growth goals, whether they are monthly, quarterly or annually.
What if, then, your financial plan contained an element of business change / transformation?
Let’s say that today you make £50k a month from your current business, but you want to transition over time to something new within the next 2 years. You could build a spreadsheet that looks at the amount of money you need to make on a monthly basis and slowly transitions over to it, using interpolation.
So if you want to move from £50k in your current business, to £25k in your new business and £25k in your current business within 2 years, you could build a spreadsheet which starts at £50k for current and £0k for new – a ratio of from 100:0 – and transitions to 50:50 over 24 months.
These ratios / percentages will allow you to very easily calculate how much of the £50k income will come from each business.
- Month 1, it’ll be £50k and £0k
- Month 2, it’ll be (approximately) £47.9k and £2.1k
- … and so on.
The fantastic thing with this is that a spreadsheet makes it incredibly easy to build in financial growth at the same time. So, let’s say today you are earning £50k per month total, but in 2 years you’d like to be at £75k, you can build this into the spreadsheet too.
You can use this same system on more than 2 businesses too, of course.
It will end up looking something like this – although this is only over 12 months, because otherwise it’s too wide to see the figures!
In this particular case, there are 4 businesses transitioning over 12 months, with Business 1 being the business to transition away from (£50k per month down to £15k per month), and Businesses 2 to 4 all growing. There is an element of overall income growth too, from £74k per month to £118k per month.
So, with one simple spreadsheet, you have clear sales figures to head for each month, for each business venture, and this includes an element of both growth and transition at the same time.
This will allow you to wake up on the 1st of every month and think “I know I need to make X from this business and Y from this business and Z from this business … how will I do that this month?”.
Crucially, it leaves behind all feelings of the scary word “growth” and just gives you a task to achieve – how do I achieve this revenue, this month? It’s a clear goal to aim for. If you overachieve, great! If you underachieve, look at what’s gone wrong and try and again next month.
Work with me?
There’s one fantastic way to get from A to B, and that’s with a clear goal, and a plan for the steps in-between. If you’re struggling to move, change or grow, please do get in touch to discuss this.