Preparing an effective financial business model is a key management function of any finance director. Whether it is necessary to assess, the viability of a new product or service, the effectiveness of a new or improved process or simply to set a strategic business plan, it is a valuable business tool.
The key areas of any financial model are Budget setting and Forecasting, Cash Flow Management, Profit Improvement and Finance to Support Growth.
Firman Financial Solutions can facilitate the business financial modeling process by providing the expertise and direction required as part of a financial management engagement.
Vision and Innovation
Vision is the starting point for a strategic plan. Key performance indicators will measure how progress is made in meeting the goals that flow from the vision. A vision must be desirable, challenging and attainable. A business leader needs to communicate a vision to everyone in the business so that they can energise themselves for the journey ahead. Once a vision is established and everyone is focused, then people can be creative and innovative in moving towards it. Firman Financial Solutions can work with a business leader and support this process with valuable financial input.
Budgeting and Forecasting
Setting the annual budget is an integral part of a Business Plan. The exercise should be done well before the start of the next financial year and should cover a period of at least the next 12 months. A budget is a fixed expression of the company’s target of performance. The budget will incorporate target sales, gross margin, fixed and variable overhead and net profit. It will be based on a set of pre-determined assumptions.
Unlike the budget, a forecast does not set the original financial goal. It is a tool for predicting the future based on what is actually happening right now. The forecast should be updated on a monthly basis and variances from the original budget should be investigated, explained and if necessary appropriate action taken to change the future outcomes.
Finance to Support Growth
Growing businesses need to have the right finance structure in place to fund growth. Funding can be obtained from various sources; equity, debt, overdraft, leasing, hire purchase and invoice factoring or discounting are common examples. It is important that the correct type of funding is obtained to finance growth and generally this will involve a combination of the sources mentioned above.
A well managed approach to obtaining finance will increase credibility in the business in the eyes of stakeholders and will serve to create and maintain sound working relationships that will increase the likelihood of success.
Millions of pounds of government funding is currently available for eligible SME’s to invest and strengthen their business, create or protect jobs and build on creativity and innovation. The funding is available to eligible businesses through Regional Growth Fund programs in the form of grants and loans. The application process can be complicated and time consuming. Firman Financial Solutions can assist in the process of identifying suitable funds and dealing with the application which invariably requires detailed financial information about the business and the project that requires funding assistance.
Support from a financial expert will help to improve business performance and deliver growth plans through vision and innovation. A close working relationship with management and regular contact will assist in the development of plans, both in the short and long term. We will act as a sounding board on strategic ideas and offer advice and solutions in order to strive to achieve the financial goals that are set.
Mergers and Acquisitions
M&A is an area of corporate strategy involving the buying and combining of different businesses that can help an enterprise grow more rapidly in its sector or location.
It is a way for a business to consolidate its market share or to diversify in to new products or services.
Firman Financial Solutions can produce the plans and projections to assess the viability and effects of such a transaction, to assist in the ultimate decision making process.
Exit and Retirement Planning
Many owner managers put in a lifetime of hard work building their business only to throw away some of the rewards by failing to consider properly how they will exit from the business, both financially and as a manager.
It is vital to begin planning an exit at an early stage if it is to be a success. There are many strategies that require consideration including, sale, merger, management buyout and family succession. It is important to establish a strategy early and have a plan that places the business in the best possible shape to affect the plan.
Exploring Tax Planning Opportunites
When it comes to taxes, whether it is corporate or personal tax, it is wise to ensure that you are not paying more than is required. Taxation is very complicated and the rules, reliefs and allowances often change, so it is important to make sure that advice is sought early to take advantage of the legislation and to minimize the liabilities that arise on profits and financial gains. If an individual or a company is envisaging a significant or unusual transaction, it is wise to consider and plan the best possible tax strategy well in advance.