Published on: 27 April 2018
Last Updated on: 08 October 2020
It’s easy to think only the big things matter when you’re looking at your finances. Your choice of mortgage and how much student debt you carry tie up your money in major ways, after all. Their effects can be so significant that many people assume they can’t make any positive changes to their finances until they can renegotiate their mortgage or pay off their debt. But these people are forgetting the lesson of the butterfly effect. Though the flapping of a butterfly’s wings may seem insignificant, the air it displaces can set off a chain reaction that causes a hurricane half-way around the world.
If you’re ready to start improving your finances, don’t let the size fool you. You don’t have to wait until you can sort out the big things in your ledger. Even small financial choices can have a huge impact on your life. Take a look at this list of simple and small changes you can make to help bring order to your financial house.
Shop for groceries like a pro :
Your weekly trip down the aisles can lead to considerable savings if you’re organized. Maximize your savings at the supermarket by including these techniques every time you shop:
Make a list: Research from the University of Pennsylvania shows shoppers who use lists can save 23 percent on their grocery bills. How? Those that stick to a list are less likely to make impulse purchases that bloat their bills.
Shop generic:Recognizable brands often cost more money for no other reason than the label. Compare prices of generic items and make the switch.
Use coupons: Coupons strike serious cash off certain items, especially when you use them on top of existing sales. Certain retailers allow you to stack them, so you can redeem more than one coupon on a single item and double, triple, or quadruple your savings.
Price match: When half of your list is on sale at one grocery store, and the other half is on sale at another, you can cash in on both sets of promotions by shopping with a retailer that price matches competitor’s flyers. Though it will take some time at the till this strategy will save you the cost of driving around town to cash in on deals.
Bank differently :
How you deposit, withdraw, save, and invest can affect what’s sitting in your accounts. Slash unnecessary charges and drama from your life by adopting these new banking habits:
Open a no-fee checking account: Most banks charge you monthly fees if you can’t keep a minimum balance. You can skip these charges by transferring your funds to a bank that doesn’t place these restrictions on your accounts.
Stop using ATMs: Depending on where you live, you can spend $5 for the privilege of using an ATM. Let this post help you cut these charges out of your life by withdrawing from your bank directly.
Search out online solutions: Traditional banks often have complex barriers that delay or prevent you from getting a loan you need to pay a bill, causing you to miss deadlines and pay more in interest. Direct cash advance lenders like MoneyKeyaren’t bound by the same red tape in most US states, so getting a payday loan from MoneyKey.com is simple by comparison. They’ve eliminated many of the complexities bogging down conventional assistance, so you can get a necessary cash advance quickly when time is of the essence.
Shop with cash when you can: While mobile payments are more convenient, shopping with digital forms of cash can cause you to spend more. Try shopping with cash as much as possible, leaving credit cards and other e-payments for unavoidable purchases.
Though few of these tips are impressive on their own, their true significance lies in their cumulative effects. Make enough little changes for long enough, and your financial habits can result in considerable savings.
Content Rally wrapped around an online publication where you can publish your own intellectuals. It is a publishing platform designed to make great stories by content creators. This is your era, your place to be online. So come forward share your views, thoughts and ideas via Content Rally.
One of the common reasons why small businesses fail is the lack of working capital. Poor financial decision-making can be detrimental to your small business.
This will not scare you or put you off the idea of starting your very first business. However, it is to convince you how important it is to draft a financial plan for your small business.
The importance of predicting your financial health is not just to maintain a steady cash flow but also...
Understand how lucrative your business is in the long run.
How long will your business be at break-even (no profit, no loss)?
When can your business start making a profit?
Most importantly, what is the contingency plan of any financial hurdle?
In this blog post below, we will be discussing the following:
Importance of a financial plan for your small business.
Elements of a financial plan for your small business.
A template to create a small business plan (for any business).
Importance Of A Financial Plan
Here is why you should begin creating your very first-ever financial plan for your small business.
1. A Business GPS?
Imagine yourself driving to a new destination without knowing where you are or in which direction you should proceed.
This is what it is like to open a business without having a financial plan.
A financial plan will give you a clear roadmap to your business journey, and determine how much to spend on each destination.
2. Where Is The Goal Post?
We all have a vague idea of what a startup goal should be. However, getting overwhelmed is common without a clear picture.
A financial plan will provide you with a clear goalpost. I am talking about tangible, measurable, and achievable goals.
Whether you want to expand your business, increase profits, or reduce costs, a financial plan gives you a clear path.
3. What Ifs & Risks!
It is given that your business won’t be smooth sailing forever!
Businesses often face unexpected expenses. It could be something as simple as equipment breakdowns or sudden major market changes!
As a business owner, being financially ready is a crucial step!
A financial plan can help you set aside emergency funds, so you're prepared for these surprises.
4. A Long-Lasting Impression
Want investors early on for your business? Then, it would help if you offered them a steady financial plan.
Remember, lenders and investors want to see a well-thought-out financial plan before they commit their money.
Therefore, having a solid plan shows them that you understand your business's financial health, its cash flow, and the potential profit opportunity. Hence, we are serious about making your business a success.
5. Improves Financial Decision-Making
With a financial plan, you better understand your cash flow, revenue, and expenses.
This knowledge helps you make informed decisions, like when to invest in new equipment or whether to cut costs.
Important Elements Of The Financial Plan Of A Small Business
Before you begin your financial planning, you should be aware of the different financial jargon for a business.
1. Cash Flow Projection
This includes predicting the market, what effect your product will have on the market, and how much you can earn from it.
Now, taking the potential amount you create capital expenditure for each month. The function of a cash flow projection is to ensure you have enough (at the end of the month) in terms of expansion.
It is common for a business to live month by month with no profit for the first six to eight months of the business. Essentially you are establishing your business.
However, if it crosses the one-year mark with just a break-evens, the following could be the reason:
Your business is not making money because of the lack of demand.
The expenditure is way over your income. You must start some cost-cutting methods.
There is a lack of marketing, and your small business is not reaching the target audience.
You do not have enough investment for the small business you are starting.
Keep these points in mind when starting your cash flow!
2. Balance Sheet
A balance sheet is a financial estimation of your small business’s current state. Here are some of the important items your balance sheet will have:
Income & Expenditure
Total owning & total owing (personal debts or small business loans).
Assets that are currently under collateral.
Upon reading it might sound simple. However, when it comes to a balanced business sheet, you will require a finance professional to craft one.
3. Personnel Expense
This brings us to the next point in any financial plan for a small business. The personnel expense, or the amount you are spending on hired personnel.
It doesn’t always have to be your employees. In fact, the number of employees for a small business will hardly reach 15 in the very first year.
A personnel expense includes individuals working as consultants for the business, and the different professionals you hire to help with the internal work (e.g. Finance officer to create the balance sheet).
Some of the common elements of a personnel expense are:
Cost is based on the positions each professional is holding.
Personal insurance plans for your workers (at least medical insurance).
Expenses are spared for other professionals working externally with the business.
4. Assets
The tangible assets that your small business owns:
Current Assets: What the business currently owns. These include inventories, machinery & tech devices, prepaid expenses (for example, digital tools), and other office supplies.
Tangible Assets: The one that physically exists under the name of your small business. Real estate (This will not include rented warehouses or offices. These will go under the expenditure section), land inventory, tangible investment (gold & bonds), and saleable merchandise.
Non-Tangible Assets: These are assets that are not in a physical form. Intellectual property, pre-paid tools, investments (stocks, Cryptocurrency, mutual funds).
Non-Operable Asset: Assets under your small business but from which you are not getting any income. For example, land you have an investment in but not yet open for any business-related functions.
Operable Asset: Assets that your business owns currently, and that are bringing some income. For example: produced goods, factory space, warehouses, and office space.
5. Products & Services
The products and services you are planning to offer will also come into the financial planning for small businesses.
These include the following:
The raw materials are required to create the goods.
Factory costing.
Warehouse costing.
Transport & Drop shipping costing.
Worker’s salary & insurance.
Contingency management funding. (In case of any accident or unpredictable situation).
The summation will give you the total cost of production. With which you can create and understand the market value of your product.
This step is very important to assess the profit and loss of each item.
6. Income Projections
Another crucial part of small business finance planning is prediction. This is how you can predict whether your income will have any substantial income.
Here is how you can protect your business income (before starting it):
Check business income projections of competitors through several data analyses.
Is your small business subject matter trending in the market? What is the current market share of such companies?
Are investors willing to invest in a business venture as such? In fact, check some of the Shark Tank successes, and analyze which business venture seems more profiting by investors themselves.
The inflation rate of the past decade regarding the product or service you are about to sell also matters.
7. Marketing
You cannot spend everything on logistics and not worry about marketing.
One cannot ignore this matter, especially in today’s day and age when small businesses are reaching new milestones by a simple influencer shoutout, or social media virality!
Here are some of the factors in which you will need to spend in marketing:
Social media marketing tools.
Influencer marketing.
Small ad-films over YouTube.
Website building and digital marketing (Website domain and SEO tools).
8. Risk Management
No business is protected from the risks that come to every business in its lifespan. However, the contingency plan is not getting ambushed by a sudden change.
Here are some of the financial risks/uncertainties your new business could face:
Market Risk: The ups and downs of the current & dynamic economy. In fact, after the pandemic, things have become a little less predictable.
Reputation Risk: Social media is indeed bringing customers and businesses closer. However, the downside of such connectivity is the risk of a tampered reputation, especially when audiences jump to conclusions upon hearing anything on the internet.
Competition Risk: This is a common risk every business faces. When your competitors launch something new & exciting, there could be a significant shift in sales numbers for you.
Environmental Risk: One good example of environmental risk that has previously impacted businesses majorly is the pandemic.
Political Risks: The political scenario of your country can have a considerable effect on your business, especially in terms of export-import & business expansion.
This is one of the reasons why having a financial contingency plan for managing sudden risk is one of the crucial components of a business financial plan.
Business Template For A Startup
As promised, we have a business template that will help you take that very first step for your startup.
Financial Plan For Startup (Template)
Table of Contents
1. Financial Overview: A Financial Overview will consist of a financial overview of your business’s current state. Also, please provide the key points and takeaways of the financial data that you will provide.
4. Assumptions – Market Research: This is the step for market research and predicting the business’s profit potential.
5. Break-Even Analysis: A table or graph which provides information on the number of units your business needs, and how much you need to sell to make a profit.
6. Financial Statements: This will include the following charts.
- Profit & Loss (Optional if you have a startup)
- Cash Flow Statement (How the monthly cash flow will look)
- Balance Sheet (Monthly/Quarterly/Yearly Income & Expenditure)
Elements For Your Balance Sheet
The following is what your balance sheets should include based on items required: monthly, quarterly, and yearly income & expenditure.
Operational Financial Plan
Business Location and Facilities
Technology and Equipment
Key Operational Processes
Supply Chain and Inventory Management
Management and Organization Financial Plan
Organizational Structure
Key Management Team
Roles and Responsibilities
Hiring and Training Plan
Financial Plan
Start-up Costs (for new businesses like loans, downpayment; collateral, and personal investments)
Revenue Projections
Expense Projections
Cash Flow Statement
Profit and Loss Statement
Break-even Analysis
Funding Requirements and Strategy
Funding Needed
Purpose of Funds
Potential Funding Sources
Funding Timeline
Key Risks
Risk Mitigation Strategies
Financial Tools to Ease Your Job
In the modern age of technology, you can always lean on tools to automate some of the financial tasks.
So, if you need that digital assistance when
Begin Your Journey!
This is a sign for you to begin your journey as a first-time business owner. Yes, it is overwhelming, and yes it can be intimidating (hence the long procrastinating period!).
Creating a financial plan for even a startup can be intimidating. Here is how you can make this journey a little easier.
Start with defining your business first. The executive plan is a must. You should know what your business is all about.
Then, move through the basic income and expenditures.
Take help from professionals in tax advice and create a detailed balance sheet.
Finally, consider seeing your whole financial plan in a timely manner. It is important to take one step at a time.
Hopefully, we can give you enough answers about a business financial plan. How is your journey going? Please let us know in the comment section below.
Read Also:
Tax Implications For Independent Event Planners
Use Online Event Payment To Streamline Your Payment Process
Everything you Need to Know About Term Insurance Plan Premium
Financial Planning For Contractors: Ensuring Project Viability
What are your investment goals? Some of the most common savings and investment goals people have are retirement, education funds for children, saving to buy a home, starting a business, switching to a more satisfying but lower paying career, getting married, or even going on a vacation. These are all great reasons to save and invest, and they all come with different investment strategies, timelines, and risk tolerance.
None of them are mutually exclusive. In fact, you should probably be balancing a few of these investment goals at the same time. Whatever your other savings goals, retirement should always be on your mind, and that means long-term growth with a balanced portfolio. While goals such as buying a house or going on vacation may have much shorter timelines, retirement offers an opportunity to grow your savings to new heights through compound interest and balancing high-growth, high-risk investments with low-risk alternatives.
Invest in Low-Risk Assets like Gold:
One low-risk asset you should consider buying is gold. Many investors consider it superior to other low-risk assets like treasury deposits or money market deposit accounts. There are a few qualities that make gold a better investment:
Inflation-proof; since 1971, the value of a dollar has gone from 1/40 of an ounce to 1/1300 of an ounce, while the gold-housing ratio (the relative value between gold and real estate) is about the same.
Highly desirable when inflation is higher than interest rates.
Performs well when stocks do poorly, helping you offset losses.
Highly liquid and you can sell easily even when stocks are considered toxic.
Here’s how you can get started investing in gold today.
Buy Gold Online:
Buy gold online for a cost-efficient way to add it to your portfolio. The prices will be lower than a physical shop, and shops today are often in the business of selling more collectible coins. Get straight to the punch by buying coins and bars that were made for the modern investor – straightforward, predictable costs and no-nonsense products.
Bullion vs. Paper:
Gold bullion is your safest bet for investing. You have maximum control and minimum third-party risks. Paper or ETFs place your money and your trust in management and trading practices that aren’t easy to understand, such as lending and futures trading. Gold bullion is by far the more secure option.
Buy Gold Bars or Coins:
Now that you’ve limited your options to physical gold bullion, there is still a lot to choose from. Gold bars and coins are more cost-effective products. All forms will have premiums over spot prices. It costs mints labor and machining to create bars and coins, and companies face expenses such as shipping, storage, and insurance, which they recoup through premiums.
Gold bars have less production value than coins, so they are an excellent way to save and buy at something closer to spot prices.
Gold can help you meet your investment goals. Allocating a portion of your portfolio to gold means you have a highly liquid, inflation proof asset you can depend on whenever you need it, whatever the market looks like.
Read Also:
Investors Agree: Gold And Silver Is The Way To Go
Cut Risks And Guarantee Gains: Why Real Gold Is Attractive
Bitcoin has officially been introduced at the traditional stock exchange. The first country to make this significant move was Canada. Before that, the only way to buy and sell BTC was by using a digital currency stock exchange, which is still the most popular way to trade Bitcoin and other cryptocurrencies.
The Great White North officials authorized a Bitcoin fund that was immediately introduced to the stock market. This event will pave the way for many investors to access the popular cryptocurrency and try to make a profit with its help.
The Bitcoin index fund was proposed by a company called Purpose Investments.
The Toronto Stock Exchange approved the start of the fund on February 18. As announced by the spokesperson from the Ontario Securities Commission, the fund uses the acronym BTCC.
The role of the fund’s administrator belongs to a Canadian company called CIBC Mellon Global Securities Company. The sub-custodian is the Gemini Trust Company. There are no similar traded Bitcoin funds anywhere in the world. It means that Canadian stock traders could start a trend where many other stock exchanges will introduce a cryptocurrency-backed fund.
Purpose Investments issued an official press release declaring that the fund was the first in the world to be physically settled in BTC and not derivatives. It means investors will access cryptocurrencies conveniently without self-custody risks and all associated dangers that digital cryptocurrency wallets bring.
The main risk brought by digital wallets is the usage of keys. A private key is the only thing that allows you access to your cryptocurrencies. This key is like a password, but it’s irretrievable, meaning your Bitcoin storage will be lost forever if you forget the key.
For instance, if you lose your Facebook password, you can always send a request to change it. The platform, being a centralized entity, will grant you that request. Unfortunately, that option isn’t available when it comes to digital wallets, meaning a lost key is gone forever.
Many people don’t feel confident about this arrangement and believe handling your own keys brings a certain risk. That is why an exchange-traded fund seems like a better option at the moment.
In other words, being in charge of your own fortune requires having a high level of responsibility and keeping your private keys safe and secure.
Bitcoin Reaches New Heights:
When Bitcoin was introduced to the world in 2009, it was worth almost nothing. You could buy hundreds of Bitcoins for a couple of dollars. The first time that the cryptocurrency peaked was in December 2017, when the price reached almost $20K. After that, the price started going down, with many pessimists predicting the ultimate fall of BTC.
However, there was no reason to worry. After a somewhat quiet period in 2018, when the BTC rate reached as low as $3,500, a slight bump happened when the price increased to more than $10k in 2019.
Then, the Covid-19 pandemic started, and people started looking for a way to store their wealth. At that moment, Bitcoin turned out to be one of the most lucrative solutions.
Therefore, they joined a stock exchange cryptocurrency and started massively buying BTC. The price first reached around $30K, and it is currently being traded at about $45K. This was a reason good enough for many people to consider buying “digital gold.”
Another reason why this cryptocurrency increased in value was the fact that big companies started investing in it heavily. For example, Tesla invested approximately $1.5 billion in bitcoin, and many smaller investors followed its steps.
What About Other Cryptocurrencies?
So far, Bitcoin has been the most popular cryptocurrency, traveling the longest distance on the road to widespread adoption.
However, it’s definitely not the only crypto out there, as many other altcoins are pretenders to BTC’s trone. Some of them might even get a similar treatment by traditional stock exchanges. The most likely candidate for that is Ethereum, a cryptocurrency supporting the Ethereum platform.
Besides Ethereum, Bitcoin Cash is doing a pretty good job, as well as Tether, Binance Coin, Ripple, Litecoin, and more.
Final Thoughts:
The introduction of Bitcoin to the traditional stock exchange gives Canadian investors more room to access the cryptocurrency.
They’ll be the first ones to test how that works and whether one can make a profit by investing in the Bitcoin ETF. If all goes well, we could expect other exchanges to do the same.
All eyes are now on the Wall Street exchange, which is expected to copy the homework from the Canadian stock exchange. Will there be additional Bitcoin funds used by investors to trade on stock exchanges around the globe? At this moment, everything seems possible.
Read Also:
Exciting Facts About Cryptocurrency And Crypto Wallets
How to Buy Bitcoin From Norway
HybridBlock: Why Binance Is Investing In Crypto-Fiat Trading
Everything You Must Know About Bitcoin Circuit: Legal or Scam
