Whilst running a business is often hugely gratifying, it is always hugely challenging. With multiple demands on owners and urgent tasks inevitably taking precedence, it is not always easy to think about the bigger picture and to find the time to put a proper financial plan in place. However, if you want to put the right building blocks in place to create a successful business, then it is financial management that is the cornerstone to building a business with expansive horizons.
This guide outlines 10 reasons financial management is vital for your business, and how to ensure your business is in the financial position to maximize its potential whether opportunities or challenges arise. Financial management is key to every business Accountancy Age believes that automating this function can be the first step to proper controls.
- Without it your business is more likely to fail
A deficient, or non-existent, financial plan is one of the most common reasons businesses fail as they are caught off-guard by overestimating revenue or with a lack of cash flow. The planning process will itself highlight opportunities and risks, reveal necessary choices to be made, help you understand your market better, and bring into focus changing strengths and weaknesses.
- Is easiest with expert help
In order to get your books in order and get the best taxes arranged in the most beneficial manner then it is a lot easier getting an accountant in London that will be an expert in the field as the capital draws some of the world’s best brains to it. If you’re looking for a business advisor, London is also where you’ll find the most innovative advisors that will soon turn your financial plans into a thriving business reality.
- It will improve your access to finance
If you want to invest in growing your business or want to be protected in the event of a downturn, you will need to be able to access new sources of finance. Without a financial plan in place, lenders are unlikely to view your business as viable for financial assistance or a loan. A good plan will highlight current requirements and forecast future stresses or opportunities.
- It can reduce your business costs
Control of your finances means you can stay on top of overall expenditure against sales targets, avoid bank charges and invest surpluses wisely. The best tax strategies are only visible with a clear understanding of your finances. Getting yourself a good accountant in London and a business advisor, London is the place and quickest way to bring your accounts up to speed and find out areas where savings can be made.
- It can help you measure your success
If you don’t know where you have come from, then how will you know how far you have come? This is particularly important as outperforming your forecasts and key performance indicators can open up cheaper financing options as well as new investment areas for growth.
- It can lead to business improvements
Through good financial management, you will be able to identify areas which are underperforming and put steps in place for improvement.
- It can improve your market understanding
A good understanding of where your business is making money, or worse hemorrhaging it, will help you to spot new market trends. It will also highlight areas where a marketing strategy has been effective and suggest others where new strategies may be required. Getting the assistance of an accountant in London will get you on top of costs whilst a business advisor London can help with strategizing.
- It can highlight areas for growth
With detailed and accurate data about your business, it is much easier to make informed investment decisions. Through this data, you will be able to see which areas of your business are doing particularly well and where further growth could be had with some more investment and thought put into it.
- It can help you build staff capacity
By outlining what your everyday costs are you can see how much budget can be freed up for employee enhancement. Keeping your employees happy with training opportunities will help you to keep ahead of competitors and possibly open up new avenues for business growth.
- It can help you react to a financial downturn
Staying on top of your finances and checking actual results vs forecasted results can help you spot potential areas of risk such as changes in the market or financial downturns. You’ll then be able to quickly take steps to alleviate these risks or even fight them off.
It is clear that financial management is vital throughout the life of your business and should be at the heart of any decisions you make. You’ll be able to get the most out of a financial plan with the assistance of an accountant and business advisor. Companies House guide to Financial Management can help anyone looking for more details.