When applying to have your small business funded, a business plan is often one of the first steps, but at that stage, you have little idea as to how your business will perform in the market. Once you’ve been in business for a while, you can revisit your business plan with an eye toward long term financial goals, including what will happen when you decide to leave the business altogether. David Worrell of Fuse Financial Partners shares tips on the importance of financial planning and how you can meet your financial goals into the future.
Your Business Is Your Plan
If your small business is successful, it can potentially garner a profit for you and your employees. According to Worrell, it is important to think about your end goal when you start making long term financial plans for your business. “…a true ‘long term plan’ involves monetizing the value you have created in your company so that you can exit, leave the company and harvest the economic value so you can retire or go on to another business.” Successful entrepreneurs plan for the long run, but even if your business isn’t new, keeping the end in mind is helpful for building your company’s economic goals.
Know Your Worth
Part of your long term plan should involve being prepared for leaving the business, and a big part of this task involves knowing the value of your company. States Worrell, “There are certain things that drive the value of a business and they are different in every industry. Common value driver include intellectual property, top line sales, gross margin, cash flow, and customer diversity, for example. If you can build a company with proprietary technologies, strong sales, good profit margins, positive cash flow and a broad customer base, then you will really have something to sell when the time comes.”
Knowing what makes your company valuable will help you envision how it will function following your departure and help you manage your resources while you’re still building the brand. By thinking of your business as a financial tool, you will set yourself and your employees up for long-term success.
Alaina Brandenburger is a freelance writer living in Denver. Her work can be found at Examiner.com.