Financial planning can be daunting if you never did it before. But in an unpredictable business landscape finance teams need to accurately predict a foggy future, and that is when financial planning comes in useful.

Usually, a company has created a financial plan immediately after the vision and objectives have been set, but many fail to revisit this after the initial business plan is set, similarly to sales forecasts.

So why do you need a financial plan? Financial planning is critical to the long-term business success of any organisation, it provides a method for achieving business objectives and subsidises your business goals by confirming that the objectives set are achievable from a financial point of view. Additionally, a strategic financial plan will assist management in helping to create a business game plan and a guide on how to conduct operational tasks and achieve the required performance targets.

Creating a strategic financial plan isn’t much different from your initial business financial plan, so there is nothing to be afraid of.


  1. Review your business vision, objectives and your KPIs

Financial business KPIs are often created by the accounting team and aren’t always connected with the executive team’s strategy. They don’t always reflect the changes in demand volumes or review the future market demands.

To ensure the best results review or create your financial and nonfinancial KPIs in the light of your business objectives. This aligns the managers’ priorities and actions with the executive team’s strategy—and hence also with the business’ financial plan.

It’s also important to get input and feedback on the KPIs and how you are going to track them from all departments and ensure everyone understands the role they will play in executing the financial plan.

  1. Identify the resources required

In order to achieve the goals, you set for your business you will need to review the potential resources required. If your business targets are realistic you can do this step later, however, if you are attempting to grow the organisation, but aren’t sure if you can afford it take a resource-focused approach to financial planning. What are the future employee headcount and purchasing spend to match your goals?

  1. Create a sales forecast

Forecasting your sales is crucial for financial planning, it is a backbone of your future predictions.  Depending on a time frame you are planning for and the age of your business there are a couple of avenues you can take.

  • For a mature business, analyse all of the potential influences on your business, like market fluctuation, political impacts, and any seasonality that you might experiences. If you are looking to run a more in-depth sales forecast we have some guides on threatcasting and scenario planning.
  • For a new business, it is recommended to break down the important sales decisions and components of sales will help to give you a start, then review the market and competitors pricing, more about that


  1. Create a cash flow forecast

The holy grail of all financial plans, budgets, and projections is the cash flow forecast. One must create an accurate cash flow forecast to be able to create a financial plan.

The good forecast will indicate all of the requirements and any shortcomings your plan might have. Cash flow forecast will help you to review how realistic your goals are, and alert you of any shortfalls in cash balances in advance, it works as a great warning system. If you are planning to grow your business, cash flow forecast will help you to see how much more resources and budget you will require to do so.

  1. Align the resources and forecasts

This step is also known as an optimisation process. Whether you chose to review the resources required for your financial plan before or after your forecasts, you will need to align the two to ensure that your business has (or will have) enough capacity to facilitate your plan.

While doing this organically is possible, it can be difficult to optimise costs and required resources for a mature business, so it is recommended to use a specialised software. The right planning and forecasting software can help you to optimise the costs and resources required for your financial plan.


And as always, don’t forget to review, refresh and replace your plans, when the time comes. All forecasts grow less accurate with time, but if you refresh your forecasts from time to time, you will be able to see the effects of the market volatility and market seasonality has on your business. This will give you a more accurate representation of your finances and enable you to reflect on your financial plans immediately and adapt to the market changes.

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