There is a definite correlation and conundrum between Financial planning and running a SME .
The circle of life means that financial planning needs to be dynamic, flexible, changing and evolving as your needs change.
This is precisely what should be happening to your business as well.
You need to create a financial life story and a business life story and this article will concentrate on your business life story.
Where does it all begin?
It begins with a dream ,the dream is then articulated and the story begins . Like all stories each one has a different ending .
What separates the pleasant dreams from the nightmares?
Is it that successful businesses have better plans/strategies? That is only part of the story. The real reason is that successful business implement the plans/strategies and they plan for the unexpected .
If that is such a key differential why do unsuccessful businesses not plan accordingly? They have all the intentions of doing so, none of them set out to fail.
What are the key differentials?
Successful businesses have financial planning at the core of their strategy and manage their cash resources appropriately.They ensure that cash is always available . Cash is king.
Cash also needs to be available especially if something really serious unexpectedly arises.
What happens if the key person in the business dies ,becomes disabled or contracts a critical illness and there is insufficient cash to find and attract someone with the necessary skills to replace him or her.
What happens if the business cannot as a result of the above fulfill their contractual obligations? Cash flow problems arise, banks are very quick to foreclose overdrafts, suppliers cannot be paid, salaries cannot be paid and bankruptcy looms.
What happens in the event of one of the partners becoming disabled or dying. Do the remaining partners have sufficient cash to buy the deceased/ disabled interest? Does the business have sufficient cash to pay out the deceased/disabled’s loan account?
The only way that this cash crises can be avoided is for all businesses to have agreements in place to take care of any of these unfortunate situations and have the necessary funding mechanisms in place as well, all of these form a critical part of financial planning for the key individuals and entity itself.
The sad reality is that the majority of business owners are so busy irking out a living that they concentrate on all the urgent matters and neglect the important ones.
Please feel free to contact me, my details are below, as we have these financial planners available to you upon request to conduct detailed non obligatory business financial needs analyses.
CERTIFIED FINANCIAL PLANNER®
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t: +27 21 674 2115
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