What is Financial Planning for a business, and how to outsource Financial Planning?


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Financial Planning is an essential step in developing a business. Many business owners struggle with Financial Planning, which is why outsourcing this service can be helpful. This article will discuss what is Financial Planning for a business and how to outsource this service. 

What is Financial Planning for a business?

Financial planning is a way to document your current financial situation and identify future goals. The process helps you understand what’s going on with all aspects of money for success, which means that the person or business will achieve their desired outcomes faster than if they were unplanned.

Financial plans are the roadmap for your financial growth. They show where you currently stand, what direction to take next, and how it will happen in an effective manner that will lead to achieving those goals.

Financial plans are much more than just budgets. They include detailed information about an individual’s or business’ assets, cash flow and income forecasts, and typical expenditures that create the overall picture of their financial health to help them make informed decisions when it comes time for budgeting next year.

Financial plans also typically include far-term objectives, such as specific growth goals. They’re tailored to each individual’s unique needs and may take into account potential obstacles that need overcoming for you to achieve them.


Individual vs. Business Financial Plans

Financial plans for individuals and businesses are not the same. That’s because an individual’s financial objectives may differ from those of a growing company, which requires them to have their own set of unique information to manage it properly.

An individual’s financial plans are likely to include a retirement plan, an investment strategy, and estate planning. An individual’s financial goals will more likely focus on achieving a minimum annual income, reducing tax liabilities, and securing their estate for their children.

The goals of a business are very different from those of an individual, which means their financial plan must also be unique. Financial plans may include hiring new employees, purchasing inventory, expanding into new product lines, and setting up shops with physical stores on more than just e-commerce websites. These actions will help them succeed faster by achieving higher ROI (Return On Investment).

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10 key benefits of a good business financial plan

1. Clear company goal

This is a great way to start your plan because it ensures that there’s not just some pipe dream about what you want. You need something real and tangible, which will help with future funding if this becomes successful enough for investors or other parties who might invest money into businesses like yours.

Establishing product/market fit should be one of your goals. You will confirm whether or not people want our service once they’ve tried out all their features by doing A/B testing before launching any type of digital campaign.

What’s the point of investing in sales and marketing for new customers if the product isn’t ready to sell? If this is your crucial goal, you won’t set lofty goals or huge KPIs. What’s real motivation when someone has spent so much time building up their company only to be held back by an unworkable solution that they cannot push out onto consumers due to lackadaisical preparation.

2. Sensible cash flow management

Your financial plan should include clear expectations for cash flow – the amount coming in and out of your company. When you first start, there will be more spending than earnings because it’s all new territory, but how long can this go on? What level is too high or low depends on what business you’re running into trouble with.

Accurate and efficient cash flow tracking is crucial to any company’s success. But if you don’t have seasoned finance experts on hand, how will your team keep track of all their finances? Make sure this doesn’t become an issue by developing a plan to help them anticipate challenges and forecast potential opportunities.

3. Smart budget allocation

The amount of money you have to spend is one thing, but figuring out how that funding will be used can often prove more difficult. It would be best if you had a plan before making decisions about what products or services might create the best return on investment for your business’s needs to survive and thrive.

The company has a budget for each quarter or year allocated across all departments (product development, marketing, customer support, etc.). Break down the total amount spent by teams, and make sure their respective budgets reflect how important they are in achieving success with your products.

Budgets are a great way to give individual teams the constraints they can build. They know what resources are available and plan campaigns accordingly with these limitations in mind.

Tracking project or team budgets are always easier than monitoring spending. Once you break each budget down, it’s relatively straightforward for managers looking out over their group of employees to put together an accurate picture of how much money everyone has been generating from what sources.

4. Necessary cost reductions

The financial plan is the key to your future. If you have been in business for some time, building it involves looking back at what expenses and revenue streams are already established while also considering how fast or slow growth might be expected based on current trends.

The beauty of setting out a budget is that it’s an easy and effective way to manage your spending. You can also go back through last year’s expenses, and adjust them for this coming 12 months, so they are still in line with what you need or want without inflating any numbers too high.

The practice of spending control is all about staying in line with your expectations for how much you can afford. A quarterly or annual review almost always unearths areas where money could be saved and used to better.

5. Risk mitigation


The finance team is responsible for helping companies avoid and navigate risk – from financial fraud to economic crisis.

Your company must have enough financial resources set aside in an emergency. And when things are tough, it can be difficult to predict what will happen with revenue or expenses – which means there needs to be at least one more forecast than usual! Risks are hard to predict or even avoid.

You can never be too prepared for the unexpected. If you know what would happen if your roadmap changed by 20% or 50%, then it’s likely that there are other areas within your business that might need some extra attention and planning as well.

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6. Crisis management

It’s crucial to have a clear business plan in place before you can react effectively during any crisis. Otherwise, your response will be improvised and without structure or direction, which could cause more problems than solved.

As the 2020 financial crisis unfolds, finance leaders are constantly forecasting. Nobody knows when this global pandemic will end or how it may have impacted their business somehow—so companies create new plans every month at least.

The more planning you do before starting, the easier this process will be. You’re not just starting from scratch every time. You have identified risks that need to be addressed immediately with crucial levers for a response, such as cutting back spending or increasing revenue streams.

7. Smooth fundraising

Whether you’re a new startup or an established company, you will need additional funds at some point in your business’s life cycle (significantly if it is growing).

The first thing any prospective investor or bank will ask you for is your business plan. They want to see how well-thought-out and planned out it seems, as they are looking at investing their money into something that could be very profitable and risky.

To be successful in any industry, you must have a financial plan which speaks to investors. The better your history of planning and projecting finances for businesses or investments – the more likely they’ll trust whatever projection numbers come out as time goes on.

8. A growth roadmap

Your financial plan helps you analyze your current situation and project where the business will be in the future. This is something that only a broader look at one’s whole operation can provide; it involves considering markets they want to enter and how many employees or products/services they provide are expected out there already.

The financial section of your company’s plan will help you achieve goals by plugging in levels of investment along the way.

For example, if it is desired to hire 100 new employees this year, then a specific budget needs to be included for recruiting and developing talent. Otherwise, there may be insufficient funds available when trying out different strategies. This could lead to obstacles such as recruiters being too expensive or finding qualified candidates.

The pressure will be on if you’ve raised venture capital to help grow financially. You can’t afford any mistakes and need consistent growth for your company’s value proposition to make sense – which means setting out goals now is key.

9. Transparency with staff and investors

In a world where information is exchanged between employees and managers, both sides of the table need to be open about salary expectations. In today’s workforce, we see that some startups go so far as to publish salaries on their website to show transparency with what they offer while also giving an idea about future financial stability – this may not apply everywhere.

Still, at least there was one instance where executives took responsibility by sharing details during all-hands meetings, which brought actual data behind why things are happening within your business.

10. Planner Beware

Many variables affect a company’s financial results, and it is difficult to predict how consumers will respond. For example, cost changes can also be severe for some businesses. Increasing fuel costs may cause significant adverse effects when they are just starting with no data available on which to base their plans or model of operation since there isn’t anything yet experienced, so everything relies heavily upon assumptions.

Components of a successful financial plan

Profit and loss statement


The most important thing to know about your business’s financial statement is that it documents the company’s profits and losses. This report will show you how much money was made or lost during a specific period, which can be beneficial if an unexpected event occurs.

This is a virtual table. It shows how much money you’ve made and spent over the last three months, which will let you know if there are any areas where your business might need some improvement or want to focus more heavily for it to be successful in the long term.

The different formats for profit and loss statements depend on your business type and how your company is structured.

Profit and loss statement includes:

  • Your revenue (also called sales)
  • Your “cost of sale” or “cost of goods sold” (COGS)—keep in mind, some types of companies, such as a services firm, may not have COGS
  • Your gross margin, which is your revenue less your COGS

These three components (revenue, COGS, and gross margin) are the backbone of your business model.

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Cash flow statement

The cash flow statement is one of any business’s most important financial reports. It shows how much money was coming into your company, what expenses were paid out to maintain or increase that influx (such as salaries), and whether there’s enough left over at year-end.

The cash flow statement is the most important document in any business. Without it, you will not be able to raise funds, and your company won’t thrive.

A cash flow statement is vital for understanding the difference between what you report as income – your profit- and how much money has come in.

This financial statement will show you how much profit your business made and whether or not there was enough cash on hand to pay expenses; keep the doors open for several months and buy yourself some time.

See more» A Beginner’s Guide to Cash Flow Statement: Examples and Explanation

Balance sheet

The balance sheet is a snapshot of your business’s financial position at any time. It shows how much cash you have on hand, what debts and loans there are from customers, vendors who provide services for the company, and anything else that might affect its health.

The balance sheet includes:

  • Assets: Your accounts receivable, money in the bank, inventory, etc.
  • Liabilities: Your accounts payable, credit card balances, loan repayments, etc.
  • Equity: For most small businesses, this is just the owner’s equity, but it could include investors’ shares, retained earnings, stock proceeds, etc.

It’s called a balance sheet because it’s an equation that needs to balance out:

Assets = Liabilities + Equity

The total of your liabilities plus your total equity always equals the total of your assets.

The accountant will tell you that at the end of every accounting period, your retained earnings are added to or subtracted from whatever profit they were in before. This means it’s possible for a business’ cumulative total losses over time to equal its initial founding cash amount.

See more» The Role of Balance Sheet in Financial Analysis: Why It Matters

Sales forecast

A sales forecast measures what you expect to sell during specific periods. It’s an important part of your business plan and should be included in every process involving lenders or investors, for instance, when securing funds from them.

Creating a forecast in your business planning software will automatically fill out the P&L statement. This way, all the information is at your fingertips and can be updated accordingly as sales numbers change or new opportunities arise.

You can use segments to help you plan and market more effectively. As a way of making your life easier, break down the sales forecast into helpful pieces for marketing purposes and planning in advance.

Gross Margin – The difference between revenue and COGS is your gross margin. It’s an important figure that tells you how much money will be left over after all expenses have been paid, which makes it perfect for assessing business success.

See more» From Data to Insights: How to Build Accurate Sales Forecasts

Personnel plan

The personnel plan is a crucial part of any business. This can help you avoid the costs and hassle that come with hiring new employees and keep track of who’s working where.

The personnel plan should include details on each management team member, including their expertise and knowledge about the product or market. This information would be found under ‘personnel’ within your business overview section (i.e., company description).

You can also choose to list entire departments if that is a better fit for your business and the intentions you have for your company plan. There’s no rule saying only individuals from management should be listed here, so feel free to experiment with both options.

This is the perfect place to list any potential new team members or departments you’ve budgeted for but haven’t hired yet. You can describe your ideal candidates and justify how much they will cost in the salary range.

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Business ratios and break-even analysis


Knowing business ratios is always a good idea. These three numbers—the profit and loss statement, cash flow statement, or balance sheet for your business are all you need to calculate the standard ones that measure how profitable (or unprofitable) an individual company has been over time.

Common profitability ratios include:

  • Gross margin
  • Return on sales
  • Return on assets
  • Return on investment

Common liquidity ratios include:

  • Debt-to-equity
  • Current ratio
  • Working capital

Of these, the most common ratios used by business owners and requested by bankers are probably gross margin, return on investment (ROI), and debt-to-equity.

The break-even analysis is a complicated calculation determining how much you need to sell to cover your expenses.

Determining your break-even point is not an easy task. You’ll have to calculate the contribution margin from what you sell and how much it costs for everything involved in running this business, such as rent or wages for employees who work on commission instead of getting paid hourly wage like most people do these days.

In the case of a restaurant, the contribution margin will be the price of the meal less any associated costs. For example, the customer pays $50 for the meal. The food costs are $10 and the wages paid to prepare and serve the meal are $15. Your contribution margin is $25 ($50 – $10 – $15 = $25).

7 steps of creating a Financial Plan

Step 1: Review your strategic plan

Financial planning should start with your company’s strategic plan. You should think about what you want to accomplish at the start of a new year and ask yourself a series of questions:

  • Do I need to expand?
  • Do I need more equipment?
  • Do I need to hire more staff?
  • Do I need other new resources?
  • How will my plan affect my cash flow?
  • Will I need financing? If yes, how much?

Then, determine the financial impact in the next 12 months, including spending on major projects.

Step 2: Develop financial projections

Create a monthly financial projection by recording your anticipated income and expenses for the next month.

You can also make weekly projections since most small businesses operate with very tight cash flow; remember to adjust when incorporating unexpected costs or sudden changes in revenue streams.

You should also prepare a projected income statement and balance sheet. It may be helpful to include different scenarios—such as optimistic or pessimistic ones, so you can anticipate how each will impact your business operations in the future.

You should always consult your accountant when creating a financial projection plan because it’s you who will be explaining the details of this to bank lenders and investors.

Step 3: Arrange financing

Well-prepared projections will help assure banks that you’re reliable in managing finances. That’s why they should be prepared ahead of time by talking with their partners about what options might work best for both parties involved in the transaction.

Step 4: Plan for contingencies

If you are in a financial emergency, it’s essential to have an emergency fund. This can be anything from maintaining your cash reserve to having lots of room online for credit-card use.

Step 5: Monitor

The key to your financial success is knowledge, and that’s where monitoring comes in. Throughout the year, you should compare actual results with projected ones to avoid any potential problems before they get out of control.

Step 6: Get help

The only person who can give you the best advice for your financial situation is yourself. If, however, there’s something that puzzles or confuses you about money and how it works, don’t hesitate to ask someone with knowledge on this topican expert might be just what they need.

Step 7: Essential questions the financial plan should answer

  • How will your business make money?
  • What does your business need to get off of the ground?
  • What is the operating budget?

These are the questions you need to ask yourself before starting your business. The answers will help guide what steps and information are needed for a financial plan that can be tailored specifically towards yours, as well as provide insight into how much money might come in during different points of operation.

If these essential details aren’t worked out, then there’s no way of knowing whether or not to accomplish goals; any decisions made along the way could ultimately.

10 benefits of outsourced financial planning help businesses?

1. Customized output

Outsourcing financial planning can be a great way to get customized output without paying the high fees of a traditional financial planner. When you outsource your financial planning, you can work with a professional who will take the time to understand your unique financial situation and goals. This ensures that you get advice that is tailored to your specific needs.

In addition, outsourcing financial planning can also save you money in the long run. By working with a professional familiar with the latest financial products and strategies, you can ensure that you are getting the most value for your money. Ultimately, outsourcing your financial planning can give you peace of mind knowing that your finances are in good hands.

2. Add expertise without the fixed overhead


Businesses of all sizes face many financial challenges. They need to find ways to control costs, maximize revenue and profits, and manage risks. However, they must also ensure they have the right skills and resources to meet their goals. Financial planning is one area where outsourced services can provide many benefits.

By working with an outsourced financial planning, businesses can get the expertise they need without the fixed overhead costs. This can free up resources that can be used in other areas of the company and help businesses control their overall financial risks better. In addition, outsourced financial planning can provide valuable insights into how to manage financial resources best. As a result, businesses that outsource financial planning can gain a significant competitive advantage.

3. Flexible scheduling

The advantages of flexible scheduling are numerous. Perhaps the most obvious is that it can help to reduce costs. By outsourcing financial planning, businesses can avoid hiring additional staff to cover peak periods.

In addition, flexible scheduling can help to improve customer service. By adjusting staffing levels in response to customer demand, businesses can ensure that they always have enough staff on hand to meet customer needs.

Finally, flexible scheduling can also help to improve employee morale. By allowing employees to choose their hours, businesses can make it easier for employees to maintain a healthy work-life balance. As a result, they may be more likely to stay with the company and less likely to suffer from burnout.

4. Detailed data analysis

Tax projections and annual cash flow analysis are important components of financial planning, but they can be time-consuming and complex. For many business owners, it makes sense to outsource this work to a professional.

An excellent outsourced financial planning will have the knowledge and experience to provide accurate and detailed data analysis. In addition, they will be up-to-date on the latest changes in tax law, making sure that your projections are correct. As a result, outsourced financial planning can save you both time and money in the long run.

5. Depth of knowledge in a broad array of areas

In today’s world, financial planning is a critical component of success for individuals and businesses. However, keeping up with the ever-changing tax code and investment landscape can be difficult.

As a result, many people outsource their financial planning to experts with a depth of knowledge in a broad array of areas. These experts can guide everything from personal and entity taxation to distribution strategies and executive benefits, including deferred compensation and stock options/restricted stock. By outsourcing financial planning, individuals and businesses can focus on their core competencies and ensure their finances are in good hands.

6. Webinars are cost-effective and connect with clients and advisors

Connecting with clients and employees who may be located in different parts of the country or even the world is more important than ever. Fortunately, webinars offer a cost-effective way to connect with people in multiple locations.

Webinars also allow financial advisors to outsource planning services to reach a larger audience. One of the benefits of webinars is that they provide a way for people to connect and interact without having to travel. This can save time and money.

Additionally, webinars can be recorded and archived, allowing people to access the information conveniently. Overall, webinars effectively connect with clients and employees in different locations while also saving time and money.

7. Eliminate software updates, maintenance, and training costs

One way to eliminate software updates, maintenance, and training costs is to outsource financial planning. This can help you save money by reducing the need for in-house staff to keep up with the latest software releases and updates.

While there may be an initial investment required to outsource financial planning, the long-term cost savings can be significant. When done correctly, outsourced financial planning can help you achieve your financial goals while freeing up time and resources that can be better spent on other areas of your business.

8. Increase Trust and Credibility

Many people outsource their financial planning to professionals to increase trust and credibility. After all, financial planning is a complex process that requires a great deal of knowledge and experience. By outsourcing this important task, individuals can rest assured that their finances are in good hands.

Furthermore, working with a professional can also help to build trust and credibility. Financial planners who have been in the business for many years have established relationships with their clients, which can help to create a feeling of safety and security.

In addition, financial planners who are highly credible and trustworthy are more likely to be respected by their clients. As a result, these individuals are more likely to be trusted with important financial decisions.

9. No Software License Required

When you outsource, there’s no need to subscribe and pay for expensive software as many other planners do. You get access to a team of experts with years of experience in various industries who can enter all the necessary data into popular platforms.

If you want to go the extra mile and offer your clients an online experience that can be accessed anytime, consider licensing financial planning software. This will allow them access 24/7 from anywhere in the world as long as there’s an internet connection available, then add an outsourced financial planning resource to your existing account.

10. Advisor Coaching Included

The financial advisor coaching in your solution is a great way to prepare for upcoming client meetings. You’ll review the plan with them and discuss items that may be relevant, like how you would recommend strategies or ideas around their various recommendations as it relates specifically to what they need help planning out now. So there isn’t any confusion later down the road when these people come back again looking at another update.

Innovature BPO’s Financial Planning and Analysis Outsourcing Services

Financial Planning & Analysis is one of the Finance and Accounting Services that Innovature BPO offer boutique, customized processes to meet the requirements of many US big corporate clients. Our team commits with a higher level of customization, accuracy, timeliness, and creativity that delivers the right values you expect. Contact us to receive further consulting!

If you feel overwhelmed with your current financial situation and don’t know where to start, consider reaching out for help. Contact us today for a free consultation, and we will work with you to create a plan tailored specifically to your needs. We can take the stress out of money management and help you get on track for a brighter financial future.

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