A comprehensive financial plan allows you to get a complete picture of your resources, produce reliable financial projections, and make informed decisions. However, no matter how detailed your plans are, you may need to change or update them to adapt to any unexpected circumstances that come your way.
Here are Six Signs that your Business needs Financial Replanning:
1. It Has Been Too Long Since You Last Checked Your Financial Plan
There’s no right time to check the state of your finances and compare it with your financial plans, but at the very least, you should review it every month. You want to regularly look at the goals you’ve set and determine whether you’ve reached them or you still have a long way to go.
If your goals have changed, or if you’re significantly making more (or less) money than expected, replanning might be on the horizon. However, it might be best to enlist expert guidance and assistance during this process. When you’re too attached to the business, it’s easy to miss certain aspects, problems, or signs that may lead to other issues when left ignored. Experienced providers of CFO services can offer an impartial, third-party perspective and create a strong plan to meet your needs and drive growth.
2. Your Growth Is Stagnant
Growth is crucial for any business entity. It allows you to acquire the resources you need to increase efficiency through economies of scale, build and beef up your competitive advantage, and improve the quality of your products and services. Unfortunately, some small business owners may not be able to pay for full-range marketing services. As a result, their growth rate suffers.
When your growth is sluggish, here are some of the benefits that financial replanning offers:
- It’ll enable you to identify which products and services to abandon or focus on.
- It can help you shift employees into new roles so they can learn about other areas of the business, learn new skills, and re-engage their passion for the business.
- It makes it possible for you to determine whether you need to introduce new products to complement or supplement your existing ones.
3. You Have Hired Freelancers For Full-Time Roles
When you’re just starting out, you may not have enough work or the budget for full-time employees. So instead, you may choose to hire freelancers to complete certain tasks that require specialized skill sets or knowledge.
Unfortunately, when your business grows and expands, freelancers can’t grow and develop with you. Since they’re not part of your company, they can’t step or advance into other functions or roles; they can only perform the specific tasks you hired them for. Once you realize that your company needs full-time employees, it’s time to examine and redesign your plans.
4. You Need Financing
Banks and other lenders need an updated plan before they can approve your request for financing. This financial plan should accurately present your current position and your revenue outlook for the coming year. Replanning can help you check and demonstrate your business’ viability.
5. There Are Significant Changes In Your Company And Target Market
Your internal resources and your target market are vital parts of your financial plan. Any intent to change or update them would impact your finances and profitability. Every time a major shift happens, consider rethinking and reassessing your plans to account for those adjustments.
Here are some of the changes in your company and target market that may require you to update your financial plan:
- Shifting customer attitudes, needs, tastes, and preferences
- Shifting market trends and conditions
- Changes in internal operations such as new management or rapid hiring and onboarding of new team members
- New regulatory climate due to new laws that affect your operations, products, or services
- You’re planning to enter a new market
- Your business has developed or acquired new technologies, products, services, or skills
- You’ve crossed a threshold such as expanding your team, moving into bigger offices, or reaching more than USD$1 million in revenue or sales
6. You Have Stronger Competitors
Staying on top of what your competitors are doing is crucial to maintaining your position in the market. However, don’t expect them to slack off just because you’re leading the pack. They’re bound to find new ways to improve so they can get a bigger slice of the pie.
Whenever a new competitor emerges or an existing one changes course, you need to consult your financial plan. You have to be ready to take on new or stronger challengers that are targeting your customer base.
If you’re experiencing any of the signs listed above, it’s time to take a fresh look at your financial plan. Replanning can help you create a more accurate framework that effectively reflects your goals, maps out your strategies, and prepares you for future challenges.