Reason #1: To be prepared for setbacks and pitfalls.
Every business goes through these kinds of things where business may not be booming, but actually decreasing. They will be struggling that business failure becomes a possible outcome. The purpose of financial plans are to help you get back on track, to pick you up when life knocks you down. The setback may be debt, for example. This plan will help you and prepare you to deal with it. It can help you figure out if you need to raise your costs and it will help you to anticipate things in advance. The plan is to help you set goals and help you have financial success.
If you don’t plan it, you will find yourself closing down your business, dealing with debt, and unemployment.
Reason #2: It helps your business stay organized.
To survive as a business, you will need this plan to stay on task, stay financially stable, and organized! You will need this plan before business begins and as you go along the years of service, you will be revising and updating it very often. It is a good way to keep record of progress of the company and if you are staying on task.
Organization is key to sustain your business, to help it grow, and to be successful. If you fail to stay organized, things will go downhill…you may lose money, lose your business, lose costumers….it’s not a good thing to be unorganized.
Reason #3: Estimation of future profits.
This plan will help you to have a number in mind of how much you are to make from your business. It estimates your future earnings and expenses. It provides you the opportunity to see how your company can grow. It assists you in tracking market activity and to see if your business strategies are in effect.
If you don’t know what you want or how much money you want to earn, you will not be completely organized or prepared to face debt (connecting to the previous reasons). You need to know if you have enough to survive in this life. Will you have enough to feed your kids? Pay mortgage? Knowing how much you spend and earn must be kept under your radar and in your control. If not you may find yourself financially struggling.
Reason #4: Diversification.
Since this is not my strongest subject to understand the article read, “While businesses often thrive by picking a niche market and sticking with it, financial planning often means making investments of profits into a diversified portfolio. This gives the company another stream of potential income that can be relied upon when the going gets tough. Some of the most successful businesses make most of their money from investing in other companies” (eHow Contributor). I figure they said it best, rather than I trying to rephrase it.
Reason #5: Retirement
This plan helps you plan so far ahead towards your years of retirement. You are able to see if you are financially stable to retire from your business and live a sustainable life without income.
If you aren’t ready for retirement (financially), you might find yourself working during your possible retirement years….when you are old and perhaps incapable of doing the things you used to as a youngster.
SnapRant World Cup
June 18, 2018
Mercer releases projection on Canadian retirement for 2017