Their efforts must be coordinated with those of the financial staff in charge of preparing the financial plan.
The accuracy of the financial plan depends on the quality of information used in the assumptions for the financial models.
Creating realistic assumptions for key variables such as projected unit sales and pricing is critical.
Again use prior year numbers as guide but make sure you allow for increases that typically occur. Include additions to personnel that will be needed to carry out the strategies you devised for the upcoming year. If cash balances appear low for certain months, shift discretionary expenditures like advertising out of those months and into months where revenues are higher.
A strategy of improving response time to customer inquiries could require adding customer service personnel, which would raise the amount forecast.
Each month, actual financial results are compared to the numbers in the forecast, and efforts are made to identify and analyze significant variances.
These variances may require an adjustment in strategy to get the enterprise back on track toward its revenue and profit goals.
There are many resources to help finance your business.
You may also choose to seek advice from a finance professional such as an accountant or bookkeeper.
It shows where the business should concentrate its resources for maximum effectiveness in building revenues and managing costs.
Efficient financial management allows more funds to be available for marketing, expanding operations and product development, which in turn brings about more growth.