It’s not always a matter of how much you earn, but how it’s managed. The lack of financial planning is behind many of the problems that SMEs face. Even businesses with good sales and well-positioned products can find themselves in delicate situations simply by not having a clear money management strategy.
The start of an entrepreneurship can be overwhelming and full of daily urgencies to solve, which for many leaves little space to look beyond the current month. This is where planning plays its most important role. Being able to answer questions like: what are my financial objectives for the next 6, 12 or 18 months?, what resources do I need to achieve them?, can I sustain the current spending rate if sales drop? is key to avoiding impulsive decisions or those based only on intuitions.
Understanding the elements of a clear strategy is therefore important, and among them includes:
- An annual budget: it’s essential to establish realistic estimated income and expenses, and review their fulfillment month by month. It’s not enough to do it once and wait until the end of the year to compare your results. This is a living tool, which serves to adjust your goals and estimates, and therefore, to use your resources efficiently.
- Treasury control: keeping track of cash flow. It’s not just about having “money in the account,” but about anticipating bottlenecks, future payments and moments of lower liquidity. Here, a simple spreadsheet can make the difference between delinquency, penalties, unnecessary credits or damaging your image with your suppliers.
- Key indicator monitoring: ratios such as liquidity, profitability, debt or break-even point are not just for reports. When used well, they can be early alerts to detect correctable problems.
Planning doesn’t mean getting everything right. Its most important value lies in being prepared to adjust when things change. With it you can make decisions based on data, not assumptions. And above all, it means moving from a survival logic to a growth logic.
A good financial strategy not only allows you to sleep more peacefully. It also helps you have more clarity, more control and more real possibilities to take your SME to the next level. If you want to improve your financial planning, don’t hesitate to contact the Economic Office through the following form.
