Where to Start with Corporate Financial Planning

It’s never wise to underestimate the importance of financial planning, and in these risky times it’s crucial to get it right. Owners of large businesses and corporations usually have sound accounting knowledge and it can be tempting to believe that by not using a financial planning service a large, expensive corner is being cut. However a year, or even six months, down the line the tangle of complex laws and tax regulations can prove to be fatal to the business. So where to begin with corporate financial planning?

A Good Business Plan

A high-quality business plan is vital to clarify the objectives and strategies of a business. So what should a good business plan include? Well to start with the reader should have a clear grasp of what the business does, and why it has the competitive edge within the first few lines; the purpose shouldn’t be eclipsed by jargon and buzz words. A good plan should also cover information on the competition, market information and profiles of the business’s founders and partners. As the business founder that information shouldn’t be a problem to compile, it’s the next bit that’s tricky, unfortunately it’s also imperative it’s right.

  • A description of all revenue streams and the company’s cost structure.
  • A three year forward looking profit and loss balance sheet and cash-flow statements.
  • A breakdown of how much revenue is needed to cover initial investments.

These three financial planning points seem simple but they are easy to misunderstand or not thoroughly and accurately cover. And a simple mistake in the financial section of a business plan has the potential to make the business look either purposely deceptive or misinformed; neither bodes well.

Pension Planning and Employee Benefits

Business owners often get bogged down in pension planning and employee benefits, this can feel like a constant burden on time and money. However with the right corporate financial planning these pensions can be an integral and useful part of the business, enabling the owner to keep corporation tax liabilities low, keep profits safe from future creditors and even be used to purchase premises.

Employee benefits are a difficult thing to balance, it’s vital that all legal requirements are met but also important that employees feel protected and appreciated by their company.  A corporate financial planning specialist can help create a professional, streamline benefit package to help recruit and retain staff.

Contingency Plan and Exit Strategy

Many businesses avoid planning their exit strategy, feeling it shows pessimism or a willingness to ‘jump ship’. However there are multiple reasons that it is vital that both an exit strategy and contingency plan are in place right from the very beginning.

Firstly a contingency plan; many situations may arise that leave a company under threat, whether it’s political and financial instability, rises in interest rates or transport strikes.  The only way for a business to weather such storms is to have a cash reserve allowing it to trade effectively during the hard times.

An exit strategy doesn’t need to be a doomsday scenario; it should regard how the exit is made not why. The choices include a trade sale, a flotation, a family succession or simply allowing the business to close. The choices need to be thoroughly considered in the early days of the business and a good understanding is invaluable

Whatever their level of financial knowledge, it is risky for a business owner to take on such complex decisions alone. A corporate financial specialist will guide owners through the mine field of tax laws and legislations, decisions that need to be made, and information that needs to be made available to the FSA and HMRC Revenue & Customs.  Learn more about corporate financial planning services at www.ebc-trust.com today.