Financial planning is a massive task which involves determining how a business will achieve its strategic goals and objectives. On a general basis, a company’s Financial Plan reflects the vision and mission of the company.

Financial planning for every business is very important as these plans helps the entrepreneur to convert the monetary funds to profitability, liquidity and stability for organisations. While Business planning one must use the technique of benchmarking and comparing the financial plan of the company to similar organisations.

A financial plan involves the below elements to it:

  • Budgeting
  • Cash flow study and projections
  • Profitability statement
  • Variance analysis and changing the budget.

The major benefit of financial planning is that the plan helps the company see the big picture and set long and short-term life goals. A financial plan is a crucial step in mapping out the company’s financial future. When a company has a plan then it’s always easier to make financial decisions and stay on track to meet the goals.

Business planning involves a complete process circle from:

Step 1: Procurement of funds

Step 2: Planning of utilisation of fund

Step 3: Studying and analysing the difference (variance) between planned and actuals

Step 4: Changing (Revamping) the plans for future

How to do Financial Planning for small business

Step 1: Procurement of Finance as per needs:

A company needs monetary funds to establish and grow in the market. Finance or monetary fund forms the base of every business organisation. There are many ways a company can collect funds by following ways:

  • Equity financing: On a general basis small businesses’ equity comes from the owner or from his or her family savings and is the only source of funds for start–up small businesses.
  • Debt financing: These funds are borrowed funds that are paid back. The cost of debt financing is interest paid to the lender.

Points to remember for small business financing:

  • Invest your own money
  • Attract Investors: To obtain others’ investment one need to demonstrate the ability to manage a profitable business and ensure the return of funds.
  • Understand and retain working capital: Every business owners must be aware of growing need of working capital to sustain their businesses.
  • Understand risks and costs for loan types: Each type of loan carries associated risks and costs. Thus the entrepreneur must understand each option and risk of such funds.
  • Always look around for better and more suited option for investors or loan or both.
  • It’s always better to have a balanced combination of self-investment and Loan funds. Thus it’s better to seek expert advice to devise better-suited investment plan based on the business structure and individual capabilities.


Step 2: Planning of utilisation of fund

Funds are the basic requirement for setting up business and also for its growth and expansion. Thus planning of the utilisation of the procured fund is very vital for the success of the business.

The below points are to be kept in my mind while devising a business plan for optimum utilisation of funds:

  • Have a Short-Medium-Long term goal:

Short-term goals are the business goals which are to be accomplished within one year to 18-month timeframe. These goals are important for the survival of the company.

Medium term goals are generally focused on growth and survival of the company. These plans mainly range for a period of 5 years.

Long term goals are the targets set for 10 years and are more to do with the mission of the company.

All financial decisions must be taken considering these plans and their planned executions and targets.

  • Have a great Team:

Apart from planning the timely and efficient execution of the planned process is very much important. Thus the entrepreneur must collect a great team which can accomplish the planned series of activity and achieve the desired results.


Step 3: Studying and analysing the difference (variance) between planned and actuals

After planning and execution of planned activity there comes the actual output.  If the planned target is meeting the actuals then nothing like it. But if there is gap or variance in between planned and actual the same needs to be deeply analysed and studied to avoid future contingencies or losses.

Thus Variance report must provide cause and effect details on each gap or variance point. The report’s main focus should be on the causes of such variance and pain points during execution. These reports are to be prepared and documented. This report forms an essential document for future planning and also provides in-depth insights on the current problem.


Step 4: Changing (Revamping) the plans for future

After all the reports and analysis, there should a plan devised to cover the gap and ensure 100% output achievement.   There should be many control mechanism and check installed at every implementation stage to avoid any future leakage. The new financial plan devised must be prepared after taking into account all misses of last plan and also incorporate any future foreseeable dips. This new plan would be the plan then put to execution.

Thus this cycle of preparation of financial plans, its execution and then variance analysis and re-planning continues throughout the life-cycle of the company. This financial planning cycle is very crucial for the success of the company and thus needs to be taken very seriously.

In earlier times a large number of experts were hired for preparation and delivery of these financial plans. The whole financial planning process and hiring a panel of experts for the same was very expensive for a small upcoming company.

But nowadays there are many online software which can help an organisation to build financial plans based on the requirement and design of the organisation. This software works on the requirement inputs provided by the company. The online software’s which are available in the market are comparatively cost effective. This software can be customised as per company needs and thus provides a very flexible and user-friendly solution to the companies.

Financial planning software:

The below is the list of few online software which can help to strategize and chalk out a financial plan.

  1. SAP (Financial Planning and Analysis (FP&A):

This software module helps accelerate planning cycles and make decisions based on real-time financial insights using FP&A software from SAP. SAP solutions support strategic planning, budgeting, forecasting, financial analysis, enterprise performance management (EPM), and more. This can form an end-to-end financial planning solution for any organisation.


  1. Finpal:

FinPal is a complete financial planning management solution that can be deployed quickly to provide instant benefits to any planning practice. The software helps to leverage the power of Microsoft’s cloud-based services. The software is scalable, reliable and integrates seamlessly with Outlook and other Office software. There are also many built-in features which help meet business needs. Also, the software can be customised which in turn can help the organisation with flexibility.


  1. Moneytree

Money Tree Software provides professional financial planning software which helps an entrepreneur to devise and deliver the best financial planning. The company also offers a free trial period offer for 30-days.


  1. MoneyGuidePro :

MoneyGuidePro is a client-centered web-based Financial Planning Software. The said software helps build fast and easy Goal Planning for a company. The software company provides training solution in their package.


Financial planning being a crucial tax for company’s success, a company must make a decision of either choosing an online software for building a plan or hiring a panel of experts for preparation of financial plan must be taken as per the capability and requirement of the company. There are many other online options available in the market apart from the list attached above. The entrepreneur needs to identify the best-suited option in between software based plan or expert panel discussions as suited for his or her need.How do you do financial planning? Let me know via Comments.






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