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Use these five steps to create a financial road map for 2015
Step 1: Analyse your company's finances from 2014. You know that old saying 'you can't know where you're going until you know where you've been' well that applies to your company's finances too.
You have to know where you went right or wrong with your company's finances so you can use this information to create your plan going forward.
Step 2: Use your analysis to forecast your company's 2015 finances. This is, for the most part, educated guess work based on patterns and trends from your company's financial history. Its enables you to estimate the money that might come into or leave your company. This information is vital for your 2015 plan.
Step 3: Create your goals and targets for 2015. But it's not enough to just say 'I want the company to grow by X amount in 2015'. You need to create targets for each month and even each project. This gives you and your employees something to aim for.
These monthly targets give you a way to reach your target step-by-step. Without these monthly goals, it's almost impossible to assess how you're doing in terms of reaching your annual target.
Step 4: Create monthly plans to reach your monthly targets. Each month's plan must be specific and detailed. For example, if you want to make a profit of, let's say, R 50 000 in January, you need to plan:
- How much you need to manufacture for January;
- How much this manufacturing will cost;
- How much you need to sell in January to reach these sales;
- What marketing strategies you'll use to reach your sales numbers;
- How many new clients you want to attract as part of your sales figures;
- How many old clients you want to retain as part of your sales figures; and
- How you will retain old clients and attract new ones.
These details will help you achieve your monthly targets by leaving nothing to chance.
Step 5: Create a budget that supports your monthly plans and targets. For example, if you know you need to attract six new big name clients, you need to budget for entertainment costs such as lunch meetings. Your budget must also carefully control your expenses for that month so you can achieve your profit targets.
These five steps will help you create a financial road map for 2015 that will lead your company to financial success one month at a time.