Dynamic planning

More challenges to our financial plans last week as the Russian incursion into Ukraine has boosted the price of oil and gas and adds a new layer of uncertainty to global economic activity in the coming year.

How will this affect our current business plans?

There is a tendency to see a business plan as fixed in stone; something that you have to aspire to come what may. Of course, this is completely unrealistic. Consider, for example, the plight of business owners in the entertainment and hospitality sectors during the past two years.

What business owners may benefit from is a flexible budgeting approach.

Why flexible budgets?

To be of use to your business, plans need to be flexible. And there are sound commercial reasons for this approach. For example, by reconsidering your plans as external challenges arise, you may decrease or perhaps eliminate the down-side risks to:

  • Cashflow
  • Overhead cost increases
  • Sales volume
  • Sales price sensitivity
  • Staffing issues
  • Investment decisions
  • Tax planning
  • Solvency
  • Business exit plans

Part of monthly management accounts review process

Experience of the past two years, more recent challenges to global trade, rising inflation and forthcoming company tax increases all point to the need to adopt a more dynamic approach to monitoring our financial plans.

We now recommend consideration of a walk-through review of critical aspects of your business plans on a monthly or quarterly basis to ensure that remedial changes can be made before any effects on cashflow, profitability or solvency become critical.

It may well be that this short review will endorse a ‘steady as you go’ approach. But this is not wasted effort. As recent disruption has revealed, setting aside time to consider the wider context of challenges to your business plans will catch those downside risks before they become terminal events.

Please call if you would like to discuss the adoption of this strategy for your business.

Share:

Accounting in Sheffield and Doncaster Certificates

Recently Added News

Saving for a rainy day

The more draconian government interventions introduced to control the COVID outbreak have challenged all of us, businesses and individuals, to consider the notion that we

Read More »

Elastic or inelastic?

Would demand for the products or services you sell vary with price increases or decreases? This conundrum is considered by the term elasticity in economic

Read More »

Related News

Employment Allowance increase

The Employment Allowance has risen from £4,000 to £5,000 – meaning smaller firms will be able to claim up to £5,000 off their employer National

Dividends hit by NIC increase

Dividends are a distribution of company profits to shareholders. Historically, they have been taxed as unearned income – no National Insurance deductions. This is still

Tax planning 2022-23

Planning to save tax may seem like a luxury buy in these days of rising prices and recovering from COVID fallout. And yet tax planning

Quick Links

Web + SEO - LoudCrowd