Most of us think that the strategic business plan is a generally optional tool, and we shouldn't do it. We feel that it's challenging. Yes, planning isn't the simplest thing in the e-commerce business; besides, it doesn't predict the future for 100%; it's just a way to plan and avoid unnecessary risks.
When we think about our business, we think about the point where we want to turn up eventually. For us, there is only point A and point B. We matter only where we land and how we land. If we wanted to get to London, then we would most unlikely wish to land in Hong Kong or New York. Also, we most likely wouldn't appreciate the unexpected landing. We'd prefer smooth and safe reaching of destination. So, isn't that a right decision - to compile a flight map? And in order don't accidentally lose a business - airplane, we need to complete our business development map.
Tasks of financial planning
Much has been written about what finances management can do. In reality, it has only two simple tasks: to increase the profit and value of the company & to reduce risks and expenses. These are the main results what financial planning has to give to an e-commerce business.
In general, all written/typed materials and made analyses and calculations are an illustration of your business. If you want to see how good or bad things are going - all of the steps below will show you clearly in what stage your company is.
Financial growth strategy
The company goes through several different stages ranging from the idea to a great successful business. Financial turnovers rise alongside with the company growth. At the very beginning, in the first stage of simple processes developing, you should start with basic transactions. That is, you record on a piece of paper that shows how much you spent and how much you earned.
Then, when you get clients, you set up accounting. You require an accountant who will be conducting these transactions. Read in more detail in:
The next step is to form financial statements. You'll understand the right stage for that step when you begin to ask yourself questions like: What do I do? Where do I earn? What income do I have? Has it increased or decreased compared to a previous period?
In this article, you will find more information concerning different financial statements, their differences, and purposes: Understanding Cash Flow Statement. Balance Sheet vs Profit and Loss Statement.
The next stage begins when you feel stability and have a constant income. You start to wonder what your plan is and asking yourself questions like: How much can I receive next month / 10 months / a year later? What can I afford? How will my goals fit into my personal and business budget?
And here comes the next stage of the e-commerce company growth path, which includes the financial plan. The budget plan is usually made for 1-2 months, divided into every month. After that, your business already has a fully functioning strategy for the next year, at least. Now, you can predict the possible future of the company and make corrections depending on external factors.
One of the highest levels in the business growth path is strategic planning. That is to plan the company's steps for more than three years ahead; to align plans with opportunities; increase levels of probable growth.
This financial forecast gives you many answers. It's the coolest tool you can do as a gift to your e-commerce business at the start. It'll tell you what you can afford, what price you can put.