Each business must have a detailed business plan that outlines the steps required to achieve its business goals. One of the important parts of the business plan is a financial strategy. This section focuses on the financial aspect of the business, drawing the guidelines required to achieve the financial goals that the business aims to achieve. To understand how to write a financial strategy that will push the business forward, we sat down for a chat with Aviram Arviv – a CPA, financial expert and CEO of DANOY, which specializes in financial solutions for businesses. Thanks to Aviram Arviv we were able to better understand what are the most important chapters that must be included in the document, and why.
Where are we now: Current situation picture
The basis for any effective financial plan is understanding the business’ current situation. According to Aviram Arviv, this section must detail the liquid funds available to the business, its immediate obligations, and any other factor related to the business’ current situation.
Revenue vs. Expenses: As detailed as possible
In the section of expenses vs. the expected revenue, indicate with as much details as possible how much money is expected to be received and spent in the business, and for what. For instance, the expenditure section must include: salaries, rental of offices, marketing budget, payments to suppliers, purchase of equipment, taxes, etc. While the revenue section must indicate profits from services provided by the business, from investments, tax benefits, and more.
According to Aviram Arviv, only a high-level detail of expenses vs. revenue will enable management understand in which growth paths the company should invest (new personnel, marketing, equipment, etc.). A correct formulation of this section will enable the business’ CEO and management understand what the business should expect in the near future, and plan accordingly. This brings us to the next section …
Seeing Far: Planning Financial Goals
The business plan incorporates all the various business growth goals, in terms of personnel, services offered, positioning, and more. The financial strategy also includes a chapter of goals, but these focus on financial growth. It is important to understand that proper planning of financial goals must result from reading and analyzing the current situation and the future forecast. This is how real goals can be set, which allow solid but determined business growth.
Advancing in an informed manner: Risks and Scenarios
As we all know, life does not always sync with our plans – especially in business. Therefore, according to Aviram Arviv, a successful financial strategy should address possible scenarios that may affect financial planning and create solutions in advance. For
example, if the CFO formulating the financial strategy finds a new tax that may become applicable and change the balance sheet – he/she should indicate this in this section, and recommend a plan that will minimize the shock (for example: submitting a reasoned application for exemption in advance). It is important to remember: Detecting and assessing dangers and threats ahead of time may be the key to achieving your goals, and even to saving your business from a crisis.
Aviram Arviv and DANOY help companies and organizations write financial strategies that enable business growth and provide external finance department services.