Businesses often find financial planning a hassle. At the same
time, it is critical to plan your finances well through the entire
business cycle, be it before commencing, or after folding up (if you
decide to merge or sell etc.) In truth, creating a financial strategy
isn't as tough as it seems to be. There are some steps which need to be
kept in mind while planning your finances. Some of these steps are as
listed below:
- Establishing and defining the financial planner - client relationship
- Gathering client data, goal - setting and expectation - defining
- Analysis and evaluation of the existing financial status
- Development and presentation of recommendations / alternatives
- Implementation
- Monitoring
It is important to note here that some of these steps
will determine and influence the other ones. At the same time, some of
these steps need to be carried out simultaneously. To understand these
steps better let's look into how each of these steps work.
- Establishing and defining the financial planner - client relationship
In this step the financial planner, explains his / her
services to the client. This means that they explain or document their
responsibilities towards the project. Further in the same step he / she
also chalks out the responsibilities of the client. The payment and
terms and conditions are also negotiated in the same step and the time
frames are negotiated as well. Decision making processes, SOPs, Specific
Points of contact etc. are also decided at the same time.
- Gathering client data, goal - setting and expectation - defining
In this stage the data related to the financial state of
the client's business is collected. The personal and financial goals are
defined. A thorough SWOT analysis will also give an insight into the
risk taking capacity and the estimated productivity of the business.
This stage is actually where planner gathers all necessary information
before advising the client anything.
- Analysis and evaluation of the existing financial status
In this step, the client information is assessed and
analyzed. This gives a clear idea about the current status and also
helps in deciding what to do in order to achieve client's business
goals. Further, on the basis of the requested services, this stage may
include the assessment of liabilities, assets, cash flow, tax strategy,
investments, current insurance covers etc.
- Development and presentation of recommendations / alternatives
In this stage, the planner or the finance strategy team
offers recommendations to address the business needs. This is based on
the provided information in the above stages. These recommendations are
reviewed together and then informed choices and decisions are made.
Concerns are addressed in this stage and also recommendations are
revised as appropriate.
This stage is about implementing and executing the plan.
Agreements to decide and negotiate SLAs, carrying out of recommendations
etc. are all drafted, finalized and delivered in this stage. In this
stage the planner may himself / herself deliver and execute the
recommendations or might act as a consultant thus guiding the in - house
employees or team to execute. Sometimes the strategy expert may also
just act as a coordinator.
This is a stage in which monitoring and evaluating
strategies are discussed, finalized and executed. The reporting
protocols are also set up in this case. This is the stage that leads to
feedbacks and restructuring of the recommendations as and when
necessary.
