Strategic Financial Planning: Key Steps to Achieving Business Goals

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Strategic financial planning is an internal process that business owners cannot afford to ignore. Whether a business is just starting out, has been around for many years, or plans to expand and diversify, a healthy financial plan is a key element that will aid in its future success.

Without a financial plan, a business is like a ship out at sea traveling without a compass. Not only does it point in an important direction, but the process of financial planning will also reveal strengths, weaknesses, potentials, and threats. At a very competitive age such as this, businesses ought to prioritize financial planning for them to compete in the global market.

Enterprise management company, Workday, emphasizes the need for strategic financial planning to all of its clients, big or small, knowing that it is key to their success in the future.


What is strategic financial planning and management?

To fully optimize the many advantages of creating a thorough and well-established financial plan, understanding what is involved in the process is of utmost importance. Financial planning is the process of creating a roadmap that will help company owners and executives make wise financial decisions.

Financial planning covers many important areas, including assessing the financial health of the business; framing financial policies on administration, investments, and procurement; sales projections; expenses and budgets; assets and liabilities; and identifying the long-term methods to be used in order for the business to meet its goals, to mention a few.

A well-established financial plan will ensure the lifespan of a business and will serve as fuel in order for the company to go where it intends to be long-term. Financial experts believe that financial planning is crucial to creating a successful business.

Financial management, on the other hand, involves the controlling, monitoring, protecting, and reporting of a business’ financial resources, which often covers addressing debts, managing investments, applying for loans, day-to-day bank transactions, and fund generation, among others. Managers employ effective strategies in order to protect or improve a company’s financial standing.


Long-Term Benefits of Financial Planning


1. Wise budget allocation

Financial planning empowers business owners and executives to allocate budgets wisely for specific operational needs. Operating with a budget prevents wastage of funds, and working within the budget keeps a business financially healthy.


2. Solid risk management initiatives

The Marquette University in Wisconsin defines risk management as the “continuing process to identify, analyze, evaluate, and treat loss exposures and monitor risk control and financial resources to mitigate the adverse effects of loss.” Being able to confidently navigate risks, such as an economic crisis, will help a business survive losses and unexpected expenses brought about by various factors.


3. Clear cut objectives

Starting a strong financial plan begins with an important question: What does the company hope to accomplish? From there, business executives can decide on specific goals and assign the corresponding funds for them to be accomplished.


4. Clear cash flow expectations

Also contained in a financial plan are a business owner’s expectations when it comes to cash flow or the money coming in and out of the company. Constantly monitoring the cash flow will keep the business from folding in the future.


5. Cost-cutting measures are in place

A solid financial plan identifies areas where the company can cut costs, especially if the expense is unnecessary or redundant. This component of a financial plan will help business owners greatly in establishing belt-tightening measures that will reduce expenditures.


What is strategic planning?

Strategic planning is the process of creating strategies that will help organizations achieve their goals through careful implementation of plans and thorough evaluation of their impact. Mostly, it’s business leaders who are engaged in this exercise as it will compel them to come up with major decisions that will impact the company long-term.

An organization that engages in strategic planning will potentially enjoy several advantages, including increased operational efficacy, boosted productivity, sustainability, competitive advantage, leaders who are strong decision-makers, improved communication, better resource allocation, and increased profitability, to name a few.

It is vital to be able to differentiate management concepts to have a better grasp of which ones to employ in order to take an organization to the next level. Workday promotes the same practice among their clients so that they remain well-informed.


1. Strategic vs tactical financial management

Strategic financial management is the process involved when coming up with long-term plans or actions to be undertaken. This is usually characterized by coming up with vast goals that an organization can target long-term.

Meanwhile, tactical financial management is a form of planning that takes place after the preliminary strategic plan has been identified. This type of plan addresses short-term goals. These are steps to be taken to achieve the bigger goals.


2. Strategic planning vs. financial planning

Strategic planning is any process that involves the formulation of strategies to help organizations achieve their goals. Strategic planning begins with the creation of a vision for the future after an in-depth analysis of a business environment or opportunity.  Often, the creation of goals and objectives to achieve the vision follows.

To succeed in strategic planning, ask the team to answer the following questions:

a. What is your situation now?

b. Where do you want to go from here?

c. How do you go from here to where you want to be?

d. What challenges do you foresee?

e. How do you intend to overcome these challenges?

f. What resources do you need to achieve your goals?

Financial planning, on the other hand, is the process of evaluating an organization’s current financial situation and what needs to be done in the future. It plays a key role in the creation of a successful strategic plan as it will help decision-makers identify limitations and capacities.

If a business wants to expand, for instance, it begs the question of whether or not it is lucrative enough to be sustainable in the future. Business leaders need to know the risks involved, how much they are willing to spend, and how much they want to gain. And these three aspects of doing business can be answered through financial planning.


How to Develop a Strategic Financial Management and Planning Process

Business owners can always leverage the expertise of finance and management authorities to help them craft a reliable strategic financial management plan. In their absence, business leaders can initiate the process by following a simple step-by-step guide that has been proven to work for multiple organizations worldwide.


1. Outline objectives and goals

It is vital that organizational leaders know what they want to accomplish in the long run. Knowing where to go makes planning a lot easier compared to not having any direction at all. When goals and objectives are set, planning what to do next will not be burdensome.


2. Gather important data

Data gathering is crucial in planning. Organizational leaders need to be able to weigh information confidently in order to come up with concrete plans and make decisive decisions along the way. Without the right kind of information, decision-makers can be blindsided and they will fail to see the bigger picture.

In contrast, a leader who is equipped with the right kind of information will know how to position the organization among its competitors, which direction to take long term, and can lay down solid financial plans at the same time. After all, in the world of business, information is gold.


3. Analyze available company data

With the available volume of data accessible to organizational leaders, they should be able to carefully analyze them and filter out those that are not relevant and helpful. Without the proper analysis, regardless of its volume, data will remain untapped.


4. Create and cascade the plan

Armed with vital information, organizational leaders and their teams can now develop a well-researched plan that will make them stand out from the rest. Whatever plans are developed should be shared throughout the organization so that every employee is on board in achieving the major goals and objectives.


5. Implement and manage plans

After plans have been developed, implementing them is the one sure way to test their efficacy. For plans to be implemented properly, they need to be managed. Someone needs to oversee their implementation to guarantee that they stay on track, and if they don’t, someone is there to troubleshoot or make quick decisions to get it right back on track.


6. Monitor success

Documenting the success or progress of a plan is important. This kind of information will be very helpful in the next round of strategic planning or simply future meetings to check the status of a goal or objective. Tracking the progress of plans will also reveal which ones need to be improved, discarded, or changed.

Achieving goals effectively necessitates developing and studying a planning process that is unique to the needs of an organization. Perfecting the process will also require addressing its flaws and making constant improvements and changes. This is how an organization matures and reaches its goals. This is how it reaches success.

Learn more about the Workday Adaptive Planning program to help you boost your financial plans. If you’d like to know more about how you can strategically plan your finances and achieve more of your business goals, book a demo at Workday today!

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