Financial Planning for Your Small Business

As you get ready for the next quarter of the year it’s essential to take the time to reflect and strategically plan for the months ahead. All too often, we use the beginning of the calendar year to set financial goals, only to ignore them until the end of the year. Reviewing and tracking your financial plans on a consistent basis will set your small business up for financial success! 

In this post, we’ll guide you through some small business financial planning advice so you can head into the next quarter with clarity and confidence. 

Time is money. Review where you spend your time. 

We recommend tracking how you spend your time every day for at least a week. It’s important to know how you’re spending your time as a business owner. Are you delegating where you should be? Do you need to make a strategic hire to save you time? Should you consider automating specific tasks? 

Once you’re conscious of where your time is spent, you can work to make the most value out of your time.  Time tracking is an important piece of financial planning. Time is money–especially as a small business owner who wears many hats at once. 

Deciding to outsource or invest in software to automate tasks might seem like just an expense   at first. However, what matters most is the long-term financial impact and potential growth. Hiring a social media manager costs money, but maybe they help you book more discovery calls and save you time so you can actually take on that new client? Purchasing a system like Dubsado or Honeybook could cost a few hundred dollars each year, but it may be worth the investment if you save a few hours each week. 

Pro tip: We also recommend noting what tasks drain your energy vs. give you energy. Try outsourcing or automating the tasks that drain your energy to save you from burnout. 

Financial planning only works if you do. 

If you set financial or sales goals at the start of the year, take time to review your progress. Ideally, you should be a quarter of the way to meeting your end-of-year goals right now! 

Evaluate your target metrics– are you ahead or behind your Q1 financial goals? 

Here are a few things to consider if you’re behind: 

• How many clients do you need to reach your financial goals in Q2?
• What is your sales conversion rate after discovery calls or sales conversations? Use that data to consider how many calls or conversations you need to have in Q2 to hit your sales goal. Then, adjust your marketing strategy accordingly.
• If a time restraint doesn’t allow you to onboard more clients, consider what strategic hires could save you time and help you be able to increase your revenue. 
• Is your offer suite holding you back from growth? Do you have an offer suite that supports client retention? (Read about building an offer suite designed to scale)
• If your expenses are growing, but your revenue isn’t, conduct an audit of your tech stack to see if there’s anything you can remove. Be honest with yourself on if you should continue working with all the team members you currently have. 
• If your profit margins aren’t as high as you’d like them, is it time to raise your prices? Or is there another issue to be addressed that is limiting your profitability?  

On the flip side, if you’re ahead of your financial goals–congratulations!

Consider adjusting your end-of-year revenue goals to reflect the strides you made in Q1. If surpassing your pre-set financial goals means you’re adding more work to your plate, it might be time to hire. Read on to learn more about hiring and strategic investments. 

Thoughtful investments make for long-term gains.

Investment planning is a crucial part of financial planning that is too often overlooked. Making strategic, thoughtful, and calculated hires will set your business up for sustainable long-term growth.

This includes hiring coaches or consultants, investing in quality team members, continuing education courses, and more. Where and how you invest your money back into your business impacts your revenue goals, profit margins, time, and energy!

When you think about investing in a new hire, a project, a coach, or a consultant, we recommend prioritizing the return on investment (ROI). ROI is key to sustainable financial planning because it helps you see how your investment will pay off over time. Even though hiring might lower your revenue this month, think about what the hire will do for your business in the months ahead. For long-term investments (like team members, year-long coaching programs, etc.) make sure you consider the impact on your profit margins and cash flow as well. 

How we can help with financial planning in your small business

As you can see, there are plenty of ways to use financial planning to your advantage. As a small business, it’s important to know your numbers every month, quarter, etc. not just every tax season. 

According to data from the U.S. Bureau of Labor Statistics, about 20% of U.S. small businesses fail within the first year. By the end of their fifth year, roughly 50% have failed. This generally comes from a lack of financial planning and proper management of cash flow. Every quarter, evaluating your financial health will set your business up for long-term success. 

Within our shop, The Visionary Vault, we have a resource to support you in financial planning for your business! We have our Team Growth & Investment Planner — an incredible tool to help you make informed decisions on that next big expense for your business, as well as easily seeing sales & revenue projections, and strategize expense projections.

If you need more in-depth and hands-on support with business planning & development, our consulting services may be a great fit for you!