Episode 3-Season 2: Financial Planning-Budgeting for Business Success

00:00:01 Speaker 1: Welcome to the third episode of the Growth Mindset podcast series. I am Abanibhusan Bera, your host, a revenue growth strategist and sales coach. 00:00:13 Speaker 1: Today, we will be discussing a crucial aspect of business management that every MSME entrepreneur must master and that is financial planning and budgeting 00:00:28 Speaker 1: proper. Financial planning is essential for sustaining and growing your business, ensuring that you have the resources needed to achieve your goals. In this episode, we will reveal the three secrets to effective financial planning and outline a six step process to help you create a robust budget for your business success. 00:00:55 Speaker 1: Let's dive in now. What are the three secrets of effective financial planning? 00:01:03 Speaker 1: The three secrets are understanding your financial landscape. That's the first one. Second secret is setting clear financial goals and finally the third secret is regular review and adjustment. 00:01:22 Speaker 1: Now, understanding your financial landscape under secret one 00:01:29 Speaker 1: before you can plan for the future, you need a clear understanding of your current financial situation. This includes knowing your income expenses, debts and assets, 00:01:44 Speaker 1: a comprehensive view of your financial landscape allows you to make informed decisions and set realistic goals. 00:01:54 Speaker 1: Now, coming to secret two setting clear financial goals here, financial planning is driven by goals. These goals should be specific measurable, achievable 00:02:11 Speaker 1: and time bound. It's known to all of your very popular frameworks. Smart S M A R T smart goal setting is a proven framework and I have seen it as one of the best which works really well. Clear goals give you a direction and a way to measure your progress. And the final secret is regular review and adjustment. 00:02:39 Speaker 1: Financial planning is not a one time activity. It's an ongoing process, regularly reviewing and adjusting your financial plan ensures that it remains aligned with your business objectives and can adapt to any changes in the business environment. 00:02:58 Speaker 1: Keeping in mind the above three top secrets. Let's dive in the how part of it. I would outline a six step process to create your document on financial planning and budgeting. 00:03:14 Speaker 1: The six steps are analyze your income and expenses. Second step is setting financial goals. Third step is creating a detailed budget plan. Fourth is implementing budgeting tools and techniques and fifth is review and adjust regularly and finally, sixth is building an emergency fund. 00:03:40 Speaker 1: Let's discuss the six steps, one by one. Now in each step, I will talk on two activities to be performed 00:03:51 Speaker 1: under analyze your income and expenses. First activity is identifying income sources list all your sources of income including sales revenue, investments and other streams and second activity tracking expenses, categorize and track all your expenses from fixed costs like rent to variable costs like utilities and supplies. 00:04:22 Speaker 1: Second step is setting financial goals. The two activities here are setting short term goals and second is long term goals and short term goals identify those goals to achieve within the next year such as increasing revenue or reducing debt 00:04:46 Speaker 1: under long term goals, establish goals for the next 3 to 5 years like expanding your business or investing in new technology. Whatever it is. 00:04:58 Speaker 1: The third step is creating a detailed budget plan. The two activities here are first is allocating resources allocate your income towards different expenses and saving goals. And second activity is prioritizing spending, prioritize essential expenses and limit discretionary spending. 00:05:27 Speaker 1: The fourth step is implement budgeting tools and techniques. The two actions here are first is use software, implement budgeting software to automate tracking and analysis. And second is monitor cash flow regularly, monitor your cash flow to ensure you have sufficient liquidity. 00:05:50 Speaker 1: Fifth step is review and adjust regularly. The first activity here is monthly reviews, conduct monthly reviews of your budget to track your progress and make necessary adjustments. And second activity is annual revisions, revise your budget annually to reflect changes in your business environment and objectives. And the last 00:06:14 Speaker 1: step is build an emergency fund. The two activities here are first setting aside reserves allocate a portion of your income to an emergency fund to cover unexpected expenses. And second is maintaining fund regularly contribute to and maintain your emergency fund to ensure business continuity. 00:06:39 Speaker 1: Now it's time for me to describe a use-case example to help you understand, coming out with your own plan. 00:06:48 Speaker 1: The headline for my use case example is navigating financial challenges to achieve business stability. The format of the example shall be the scenario example, I'll start with next, it will be the victory which is nothing but what you decide to be successful and finally the outcome. So here is the scenario. 00:07:13 Speaker 1: Imagine you are an MME entrepreneur struggling to keep your business afloat due to irregular cash flow and mounting expenses. You lack a clear financial plan and this uncertainty is affecting your ability to make strategic decisions and invest in growth opportunities. 00:07:35 Speaker 1: Now the victory part, 00:07:38 Speaker 1: you decide to take control 00:07:42 Speaker 1: of your financial situation by implementing a robust budgeting process. You start by analyzing your income and expenses, identifying all sources of revenue and categorizing your expenses. Next, you set clear financial goals both short term and long term 00:08:03 Speaker 1: that align with your business objectives. You create a detailed budget plan, allocating resources towards essential expenses and prioritizing spending to streamline the process. You implement budgeting software that helps you track and analyzing your finances more efficiently. Now, what's going to be the outcome 00:08:27 Speaker 1: through regular reviews and adjustments, you maintain a clear view of your financial health and make informed decisions. 00:08:38 Speaker 1: You also build an emergency fund providing a safety net for unexpected expenses. As a result, your business achieves financial stability allowing you to invest in growth opportunities and navigate financial challenges with confidence. So, thank you for joining us in this episode on financial planning and budgeting. 00:09:05 Speaker 1: By understanding your financial landscape, setting clear goals and following a structured budgeting process, you can ensure the financial success of your emission. Remember, financial planning is an ongoing journey and regular reviews are key to staying on track. 00:09:25 Speaker 1: If you found this episode helpful, please subscribe to our podcast. Leave a review and share it with other MSME entrepreneurs. Visit our website https colon front slash front slash msmegrowthhub.com for more resources and join our MSME Growth Hub community to continue your journey towards business excellence. Until next time, keep growing and thriving.