4 Ways to Ensure a Profitable Financial Plan
Most successful entrepreneurs spend their time looking for ways to generate business opportunities, however, many can’t say precisely how much money they earn. The entrepreneurs that are aware of their income, expenses, and where they stand overall financially probably have and use a financial plan. Afterall, if you don’t keep track of your budget how can you really be sure that you’re making money? Here are four tips for keeping track of your finances by developing a profitable financial plan.
Develop a Plan
Review past financial records to help estimate your income and expenses each month to create income projections for the upcoming year. It’s also important to consider additional expenses you’ll incur during the year to ensure an accurate financial projection. If you need assistance making financial projections it’s often best to consult with a financial planning professional.
Monitor the Plan
An important aspect of every financial plan is a monthly evaluation of the plan’s for profitability and accuracy. In particular, pay attention to the accuracy of financial projections. If you’re doing better than expected, great! However, if you aren’t regularly reviewing your financial plan this is an opportunity to find problem areas and make adjustments.
Be Realistic About Your Findings
Hopefully, you’re hitting your financial goals, but if you need to make adjustments, make them immediately. When profits are low many entrepreneurs tell themselves they’ll “make it up later.” Although, the reality is “later” usually never comes. Once to opportunity for revenue is lost it’s gone forever. Therefore, it’s better to cut expenses and adjust your budget for a lower revenue stream rather than risk overspending. After making the adjustments, then begin looking for at areas where you could increase your monthly income.
Don’t Be Afraid to Spend
Not meeting your financial projections is a reason for concern, however, it doesn’t necessarily mean you must stop spending completely. If you can identify a reason your business isn’t performing well and can fix it by spending, go for it. Some areas entrepreneurs spend money when profits are down is marketing activities or hiring more sales staff which are two expenses that can increase revenue.
If you need help developing a profitable financial plan that meets your needs contact the financial professionals at Potter & LaMarca today!