Financial Planning of Entrepreneurs

Hello Steemian

I hope you’re doing great. I’m thankful to @mainuna for again arranging a beautiful contest. This contest topic is “Financial Planning of Entrepreneurs.”
Financial planning can be defined as a proper plan for the future, like how you’ll invest your money or do expenses to achieve your desired goal.

I also collected the best definition of financial planning from Google. I hope you get a better idea of how financial planning works in business.

Financial planning is the process of taking a comprehensive look at your financial situation and building a specific financial plan to reach your goals. As a result, financial planning often delves into multiple areas of finance, including investing, taxes, savings, retirement, your estate, insurance, and more. website link

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Every entrepreneur focuses their financial ability also on planning because it helps to achieve their business goal and run the business smoothly. My aunt is an entrepreneur; she does not have enough knowledge of 4P, but she always saves money to face future threats to her business.

Let's explore these contest tips:

How does financial planning ensure the long-term sustainability of a business?

Entrepreneurs not only focus on their present financial management but also plan for future financial management so that they'll be able to deal with uncertain threats or any business-relevant losses.

Financial planning includes

• proper investment
• saving
• cash management
• sales forecasting, etc.

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Financial planning has 5 steps. If entrepreneurs follow these five stages of financial planning,they must ensure the long-term sustainability of a business.

Define the goal:

1st, define your business goal. If you want to increase your sales, you need to spend on promotional activities. Also, based on the market demand, you need to stock your products; at that time, you should invest money in the production process.

Evaluation of the Resources:

At this stage, you should evaluate your capacity, like assets, manpower, cash, machines, and also relevant departments.

Risk Assessment:

Forecasting help to reduce your risk so if you feel that you have faced any risk in the future of your business this is the right time to take action and make the right decisions. Based on this, you should plan your financial management.

Strategy:

A proper strategy is the best way to utilize your financial support, and you'll get an idea of where you should invest and where you should withdraw your investment.

Monitoring:

This is the last step of financial planning. In this step, you should monitor your overall activities. If you face any issues or problems, then conduct a board meeting and make the right decision.

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These five steps of financial planning ensure the sustainability of the business.

What is the role of savings in dealing with unexpected expenses?

Funding:

Suppose a business owner plans to fund 10% of his profit to deal with the unexpected risk of the future. It does not need to save a huge amount; only 10% of yearly profit is enough for funding to reduce the risk.

Recycling:

Sometimes we should through the extra raw materials and unfinished or poor-quality goods. If you have any option to recycle these goods to make another good-quality product, it helps to save the raw material purchase cost.

Used same technology/machine:

We never think outside the box, but if we use the same technology for substitute or relevant, have you thought about how much money we save for the business?
This way any business owner is able to save and deal with unexpected expenses.

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What kind of financial management strategies should entrepreneurs apply to avoid financial crises?

Using software tools:

In this era, many software companies work on entrepreneur problems, and they create some tools like financial management so that anyone can understand their business position and also advice on which areas they should improve.

Budgeting:

Budgeting provides a details outline of the total expenses and incomes. Through this, you have an idea about future expenses.

Forecasting of profits or losses:

Forecasting helps you to understand the upcoming profits or losses. Suppose many investors forecast that a few months later the steemit price will increase. This is the right time for investment in Steemit. So I can say that forecasting helps you to reinvest and withdraw from investment.

Control the expense:

don’t expense for unnecessary products or any area of your business. If you're able to control your expenses, then you’ll avoid your financial crisis in the future.

Liquid cash:

Every business owner preserved some liquid cash to handle the short cash crises and solve future problems.

Avoid extra inventory:

You should stock this amount of inventory that has market demand. You also stock extra 1-3% inventory, but if you stock 20%-40%, then you will face losses in the future.

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Why is it important to determine startup capital for entrepreneurs?

Startup capital defines what are the sources of collecting capital and how it is utilized in the business.

Determine the startup capital importance for entrepreneurs because:

Running the business:

Without capital, how does an entrepreneur run a business? First, select your products, place them, and then arrange and determine the capital for the business.

Reduce the risk:

Suposses, In the future, you will see that no one purchases your current products; they want new products and innovative products. On the other hand, you have no idea how you collect the capital to invest to purchase new products and the production process.

If you have proper planning of capital resources, at that time you’ll reduce the risks.

Confidence:

I think you know the dialogue “No money, no honey,” and this quota also applied in the business. If you determine your capital you have the confidence to establish your business, invest in new sectors and also expand your targeted areas.

Share some of your own financial planning that is important to the business?

Financial planning is important for personal life as well as business. I share my own financial planning that should be important to the business.

Saving money:

Saving money helps me to balance the current situation and future problems.
Analysis of the profit and loss: based on previous sales, I should analyze the future profit or loss of the business.

Budgeting & Forecasting:

Through budgeting, I should control the expense while also forecasting future risk and uncertainty; based on this, I should be able to make the right decision.

Conclusion:

Financial planning is the part of running a business. Entrepreneurs need to determine their capital sources and also make good financial plans. So that entrepreneurs can achieve their objectives and goals for their business.

I like to invite @shadow04 @marekduda @muthu14 to participate in this contest.

Thanks for patiently reading my post

Regards
@samia-jannate