3 Keys to a Stable Business Infrastructure
As a rule of thumb, money won’t grow until you grow it. In the same way the financial infrastructure of a company will not increase and achieve stability unless you implement growth-oriented strategies to meet your goals. Read on and learn how to work on the three keys to financial success of a business.
Design a solid financial plan
A financial plan is a roadmap to bring your business where you want it to be. It serves as a guide so you will know where your business is heading, and where you shouldn’t go. It answers questions like-
- What do you want to invest for?
- What do you need to save for?
Self-employed individuals often include home, comfortable retirement, education, car and medical emergencies in the reasons why they need money to invest and save. Others consider periods of unemployment, childcare and elderly care in their list.
Here are tips when making your very own financial plan:
- Take time to study factors that play important roles in your business. This includes knowing your current financial status. You need to make sure that you have a stable money flow. Your debts should be known too. It will help you learn how to budget your finances weekly or monthly.
Your liabilities affect your whole financial plan. Knowing your assets will also help you determine your current financial status. Cash or Savings accounts may be included in these assets.
- A financial plan has to have a result. The outcome of the plan matters- actually, it’s the main reason why the plan exists. Goals should be made in order for you to have an outline of how your plan should work. It also motivates you to follow your plan in order to see the result that you expected. Considering how much your lifestyle is costing you right now, it should also be considered when making your financial plan so that you know the factors that may affect the result.
- The availability of options to help you achieve your financial goals.
Your options should include generation of income and utilization of existing resources. Another goal may have a huge or small impact on another. They are all connected, someway, somehow.
- How you employ your strategies affects your entire financial plan
Your lifestyle and financial status should be taken into account. It is important that your financial plan is well thought out and practical. Before choosing strategies, these factors should be known to you.
- Upon developing goals for you financial plan, your current net worth, alternatives, and strategies are factors that need to be identified
This is to make sure that your whole plan doesn’t go down the drain just like the other ones-if you ever had ones.
Skim over your financial plan and try to point out the flaws.
It could be a little too impossible to achieve or a little too easy. Make sure you are challenged by your financial plan-one that will take you out of your comfort zone- just not too challenged that following it seems impossible already.
Save and invest while paying off your debts, and not after you paid them all
Why start late when you can grow your money now? There are many businesses that actually thrived using their borrowed money. A solid business infrastructure doesn’t need to have a stable cash flow all the time. You only need a convenient access to borrowed money anytime you need it. When you have money to meet your current needs, such as payment to suppliers, additional tools and equipment or marketing campaigns, you can increase your ROI and repay your loans on time. But, be careful when you’re operating on borrowed money. Always save for the period where you may not be able to make repayments.
Here’s an example: Toledo Company with $100,000 cash reserves can compete with a million dollar company provided it has productive manpower, equal opportunity with the target market and an access to the correct amount of business infrastructure loan when they need it. This is especially true to those who have the same suppliers or those who obtained the products with the same price.
Here are the obvious benefits of saving and investing:
- Growing an investment over time may be one of the biggest advantages of saving. Considering the interest rates that your bank has, your money will grow over time. You’d be surprised at how much your money has gained.
- Saving may help you cover all your personal expenses- which include loan payments, bills, and insurance costs. It should be sufficient to cover up to six months with you having absolutely no money. You should be prepared of what the future may bring. Some actions from the past affect the result.