Business Planning & Forecasting

What is a business plan?

It is primarily a document that describes in detail the core objectives of your business. It further expands on these objectives by explaining how you plan on achieving them. Additionally, a business plan also dictates how you will be generating a profit and how the business will survive and grow over time. It contains all your marketing and sales plans, strategies, goals, financial forecasts, and aims.

Why do i need a business plan?

If you are running a business, you know how it is run and what the structure is. However, an outsider who is not familiar won’t be able to make sense of how things go about in your business.

Anyone who would invest or lend their money would require some sort of guarantee that their money will be returned or generate a financial return. Therefore, all investors or banks who lend invest money in businesses require them to have a solid business plan. A thorough demonstration of how financials will be handled is required in order to win the confidence of these individuals. Only a good business plan can win a loan, so you should ensure that your business plan clearly explains how your business will survive and grow over time.

What are management accounts?

Management Accounts are “a set of tailor-made and standard financial reports” that help business management make key decisions and provide a clear insight into the business situation.

Unlike Statutory Accounts that are mandatory requirements set by HMRC and Government and are prepared after the year end, Management Accounts are focused on your business requirements. So, the business can decide the level of detail, the frequency, the layout and the accounting period you wish to analyse. We understand that a one-size fit all approach does not work when it comes to reviewing performance for each of our clients. We are more than happy to discuss your requirements further and build reports that show you the most relevant information for your business on a monthly or quarterly basis.

What goes into Management Packs?

In simple, the idea is to include all that is relevant information required by management and decision makers to make informed decisions about their business. Although some large organisations can have huge sets of reports, most management reporting packs will include the following;

• A Profit & Loss (P&L) shows the performance of a business in a given period of time. It would typically show summary of Income received and types of expenses incurred.
• A Balance Sheet shows the financial position of a business at any given point in time. A Balance Sheets should be prepared with notes to help indicate key business ratios, such as liquidity ratios, debtor days, inventory days etc to highlights areas of risk and better plan for cashflow.
• Depending on your industry, nature of business, the management should work with the accountant to determine key performance indicators for the business. These should then be benchmarked against the industry norm and regularly reviewed to see the health of the business.
• Aged Debtors report is a summary of all the business debtors (i.e the people who owe you money). It shows, how much is owed and for how long the money has been owed. Probably one of the most important everyday reports to help businesses with its cashflow and to reduce its bad debts risks.
• Aged Creditors report is similar to Aged Debtors, but instead the report shows summary of creditors (i.e the people who you owe money to). When effectively managed, this report helps businesses determine how much and when to pay its suppliers.