There are numerous reasons
why you, as a business owner, should write a financial plan. What exactly should your financial plan include? You could be very detailed or very brief. Whether it’s long or short, the important
point is that it’s a formal written document, one that could be easily
reviewed. Here is what I would recommend
in one formal, all-inclusive written financial plan.
I’d begin with a value of
your business. There are numerous local
valuation companies that we could put you in touch with. We can do an informal valuation, free of any
charges.
Next I would look at a
succession plan. Will it go to a Key
employee, your family, a competitor or sold outright to anyone after your
passing? I stress writing a plan to
begin with a strategy and also make plans for contingencies.
It is also very important
to do a cash flow analysis. You can include tax issues, emergency funding, debt
obligations, employee salaries and other related topics.
Fourth, do a retirement
plan. Think about and write down when or
if you’d like to retire, what income would you like to receive and steps on how
you’d achieve that.
It would be nice to
include a section on Fringe benefit program.
Will it be a qualified plan (tax-deductible) or a plan for one
individual or a select group of people?
I would definitely include
an analysis of your Risk Management. Do
you have sufficient amount of Liability insurance, workers compensation, life
and disability insurance and definitely Health Insurance.
By writing a detailed plan,
you’re becoming more focused and taking steps to making your plans more
achievable. Plus it also helps in
showing possible creditors in any attempts to gain funding.