Financial Planning For Firms in 2021: 10 Tips By Leading Finance Professionals
As the firms look to navigate financial planning in the world's changing norms after the disastrous year of **2021.
After tolerating and ultimately coming out of the crises, the goal is to rebound to better than anticipated.
Because as the pandemic ends, when people start getting the vaccine— whether in 3, 6, 12 months, or more—the world will not be the same.
Firms that estimate the post- COVID-19 landscape and plan accordingly are in an ideal position to succeed in 2021.
Below are ten key areas to address in planning and to ensure a well-depth perspective and test critical areas' thinking.
TIPS & TRICKS TO KNUCKLE DOWN
Successful firms typically have multi-year strategic plans in place. This is a detailed practice, but financial planning likely needs significant revisions with the economy's upending this year.
Look at these tips for making a financial plan that will launch you in good waters with the customers.
Strategy Alignment
Whether it's an initial step in your planning process or a later one – there's possible merit in shoring up your 2021 finances first.
Start with revisiting your multi-year strategic plan. Examine past and current trends to prepare for the future. Here are some questions that you should consider:
- Item 1 What were the common aspects among firms in my industry that flourished during the last recession?
- Item 1 What new patrons do you need to take on board?
- Item 1 What are the threats your industry is facing?
- Item 1 Do you need to evolve your business plan?
** Cost Optimization**
Cost-cutting is often the first answer during an economic decline but cutting all costs is not nearly the best professional move.
Get the help of a financial manager who can help you identify your business inefficiencies and ways to improve them. There may be prospects to systematize certain types of working procedures to reduce labor costs.
Your expenditure should be ranked according to the products and services in high demand and those driving the most profit.
Here are some tips to reduce profits loss: - Item 1 Expect some degree of loss; don't spend time fighting for every dollar or negligible customer
- Item 1 While focusing on your top clients, also look for customers most protected from novel coronavirus risk
- Item 1 Consider altering your product or services to those that are in high demand
- Item 1 Look for product or service innovation quick wins
Consider revising your pricing model to provide more flexible and affordable options
Reduce Your Costs And Overhead.
Make a list of all your financial responsibilities. Try to lessen repeated costs( like newsletters subscriptions). Discuss rent relief with your landlord. Talk to your supplier to reduce payments or arrange a more extended payment plan. At the same time, review your firm's expense to see what you can trim.
The more money you save, the more you will have when you need to invest in recovery.
Utilize All Your Assets
Make a catalog of the assets to either lessen or cover the amount on hand. For instance, if you have kept excess inventory to benefit from bulk discounts, assess if "just-in-time" inventory might offer strategic and planned benefits.
Contemplate on the chance to sell whatever you no longer need. If you own property or equipment required, consider selling the asset to free up money and then lease it back for a direct booster of cash.
Communicate With Customers
It's important to let your customers know how your firm is coping with **COVID-19-related restrictions. When doing so, reinforce that your priority is to keep your customers and employees safe.
Stories are widespread in our customers' industry, articulating worries or concerns when turned off by firms focused on their perception.
Do A SWAT Analysis
Even without an entirely molded business plan, now is the time to give attention to the most critical questions:
Strengths: In what parts does your firm excel?
Weaknesses: What parts could be upgraded or eradicated?
Opportunities: What new services, products, customers, trends, or technology could improve the way your practice operates?
Threats: What actions are out of your control? Can you minimalize them somehow?
From your answers, identify new areas to pursue and develop a plan to minimize threats (over and above in the year 2021).
Seek Broader Insight.
In these demanding times, we can all benefit from external help. Categorize who you can call on to obtain advice about financial strategies. Some of them include:
- Item Obtain advice from your trusted team of advisors, including your lawyer, accountant, and banker.
- Item Speaking to other practice owners.
- Item Make sure to get daily information on your industry, technology, product, or services, mainly keep an eye on your competitors.
- Item Freezing Nonessential Purchases
You can save cost without burdening yourself by freezing nonessential purchases and saving up money through these points:
I. Working out more extended payment terms with suppliers
II. Reducing flexible costs, such as supplies and cost of stocks sold. Fixed prices – because fixed price like rent/ mortgage payments and employee salaries are harder to control.
III. Applying for a low-interest government loan. Some loans are beneficial to many clients and are forgivable if you meet requirements.
IV. Take advantage of tax relief provisions. The CARES Act included new tax relief options for firms, including new rules on net operating loss suppositions and firm interest expense deductions.
Working Capital Management
The primary factors of inefficient working capital management are accounts receivable, accounts payable, and inventory. Here are some best practices to consider:
Collect your accounts receivables faster: firms can cut their cash cycle by asking for upfront payments or transferring and billing as soon as data comes in from sales.
Improve your accounts receivables process: Some people usually have a hand in a firm's billing and invoicing procedure, and you should look for ways to increase their productivities.
Disburse your accounts payable more slowly: While it's ideal for you if your customers pay early, your cash on hand increases if you spend your funds owed later.
Inventory counts: First and foremost, your merchandise must be accurate and verified. Without an accurate inventory count, you don't know your real costs, and if you don't know what your prices are, you can't control them.
Better Communication and Connection Skills
Given that planners, especially the successful ones, have good EQ (emotional intelligence) skills to go with their IQ, this was surprising until we think about the pandemic's disruptive impact.
Many planners said they were "off their game" that Zoom meetings created a different feel for the client's mood. Some liked it better since time spent commuting could now be put to more productive use.
Many top salespeople in the real world had problems in the virtual world to get new leads and close recent sales.
A significant percentage of present and potential clients will want some or all of their digital communication. Therefore, many professionals plan to spend at least a day or two every week, commuting virtually in 2021.
** In Short
We all need to reflect that "average is over" in today's fast-paced world. The pandemic put the nail in the coffin of being average.
If last year has taught us anything, it is to have a proper financial strategy for a dramatic drop in the business! . But there are brighter days ahead.
But for the future, focus on restoring cash, reach out to the people you trust for their advice and input in your situation. Stay on top of growing information— and you'll be in an excellent position to enjoy an upswing.
Have you given a thought