The 6-step financial planning process for small businesses

Howdy, hope you have been holding up well since our last encounter. Last time I took you through financial planning and why it is a must for your business. Today I want to share with you a 6-step process guide to assist you come up with a financial plan for your business.

Step 1: Understand your financial circumstances

To start off, you should have a clear understanding of your current financial status. You should know what are your current assets and liabilities, insurance coverage, cash flow, taxes, risk tolerance, mutual funds and net worth. Understanding your financial circumstance will give you a base to build a solid financial plan.

Step 2: Review Your Business Plan

Your business plan greatly informs your financial plan. Your financial plan should be in harmony with your company’s mission, vision, and other components of your business plan.

Step 3: Develop Specific Financial Goals

To shoot or score a goal, you need to first aim. Same applies to your business’s finances. The success of your financial goal is highly dependent on your financial plan. To have an effective financial plan, your financial goals must be SMART – specific, measurable, achievable, relevant and time-bound

Document fixed expenses and anticipate your variable costs based on existing data. Create financial projections for your weekly, monthly, or annual planning process. The projection scope and timeframe you should use depends on your cash flow.

It’s a smart move to go over your financial decisions with a financial advisor or an accountant.

There are many variables to consider, so your plan needs to be flexible. But you should also be careful to remain within your risk tolerance and capabilities.

Step 4: Evaluate Risks and Plan for Contingencies

The best way to bulletproof your business against unplanned life events and potential difficulties is to gauge risks and think of solutions in advance.

As you are budgeting for estate planning, ensure you plan for an emergency fund and insurance.

Some decisions require a low level of financial risk, while others may be worth giving an extra thought.

Step 5: Develop and Implement a Financial Plan

This is the part where you turn all your goals, analysis, and evaluations into a working strategy.

In the development stage, you convert your data into a game plan. Implementation is following through on that plan to get your desired results.

You can lay out an excellent plan with or without a financial professional’s help. But it takes grit, discipline, and zeal to put it into action without procrastinating.

Even if you’ve been working through the previous steps on your own, you may need the help of a financial planning professional to help with your plan.

Step 6: Monitor, Reevaluate, and Update Your Financial Plan

As time goes by, your current course of action, perspectives, and financial circumstances will evolve.

That’s why you should never stop adjusting your financial plan. A good financial plan is highly flexible while it sticks within the limits of your risk tolerance.

There are foreseeable life events you can plan for, such as childbirth, marriage, and moving to a new city. Usually, when such events happen, they make a significant difference in your relationship with money and your business.

Re-evaluation is a crucial and infinitely repeated financial planning step. Continue to monitor and update your financial plan throughout changes in tax laws, interest rates, economic recessions, and other events beyond your control.

Regards,

Seline Awuor

4 Signs that you’re excessively invested in your work.

You might have read about Elon Musk’s working style, right? He is a renowned inspiration to many aspiring CEOs and junior staff. Did you know that Elon works very hard, at least 100 hours a week? In fact, many times, he goes long hours for weeks without leaving work to rest instead he would sleep on the floor in the factory. From a common man’s boss or worker, this sounds quite impressive that every company would rush for such a hard-working individual, but wait a minute, think of it this way, Not trying to say that being invested in your job is a bad idea, but it’s worth noting that it has both good and bad sides to it. On one hand, your passion propels you to perform and succeed. On the other, being overly attached to work can drag you down, drain your energy and affect your confidence.

Here are some signs to watch out for and what to do about them;

1. You let workflow into your personal life or home.

When the urge to over deliver and impress your employer overrides your off-work time and emotional wellbeing. This is when working more makes you feel good about yourself thus you try to prove your worth by working more even when you need a break at home. This sometimes goes unnoticeable but hugely impacts your health and work life balance.

2. You get offended by criticism or negative feedback against your work

When you find yourself feeling angry, sidelined, demoralized and insecure upon receiving feedback that seems negative on your hard work. It may be a comment from your boss, this makes you become preoccupied by people’s opinions hence you develop fear of uncertainty on how people think of you.

3. When suddenly, your job tittle becomes your identity off work.

When you allow your job to define who you are in a society. People know you not for who you are but for what you do for your organization. This is a perilous place to be because it makes you insecure and in fear of losing your job since your self-worth is pegged on your job title.

4. When you want to please everyone at work

It’s nowadays common to say, ‘your job is your second home” But this is not true. Sometimes you feel the need to put other people’s needs before yours or think that by solving other people’s problems, you become their hero. This also manifests when you fear expressing your challenges or asking for help because you feel like this will make you appear week or incompetent. 

A little physical and emotional distance from your job can go a long way in improving your wellbeing. Sometimes it can be doing what you enjoy besides work and be good at them. This can be taking part in a hobby, exercise, community service or doing anything that will take your mind off your job.


Remember, your work does not define you, it’s only what you do.

Did you know that I&M Bank is among the best banks in kenya and could be one of the best place to bank and even work? Check out some of opportunities you can apply for.

Also read; Stress & Resilience; The Perfect Balance in the Workplace

By Omido Joshua