Universal Funnel Law #5 – Every business demands dollars. A financial plan records the results of all activity.
Keeping abreast of finances is a simple necessity if any business wants to stay in business. Financial plans must no longer be identified as a management tool that impedes good management, but an organizational tool that catapults organizations to that next level of success. Every financial plan should have at least these 3 components.
Component #1 - Forecast A good financial plan begins with a forecast of profit and loss based upon the strategic plan. Key financial categories include:
- Gross Sales
- Cost of Goods
- Total Costs
- Gross Margin
- Total Expenses
- Operating Profit
- Net Profit
Component #2 - Dashboard A dashboard can then be constructed to measure the financial strength of the organization. This dashboard can be based upon the Balance Scorecard or other key indicators. Each of these key indicators can then be measured against current status, business goals and critical success factors.
Component #3 – Income Statement Finally, a detailed income statement is keeps track of monthly revenue and expenses. Since the income statement is the reality of what is happening financially, it works in conjunction with the Financial Forecast as well as the Sales and Marketing Plans.
Good financial plans when working with the strategic, marketing, sales and customer relationship plans will help any business to quickly double their results.
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