7 steps to build your financial strategy

A financial strategy is a plan which defines your financial goals, it will outline how you are going to make your money and how you are going to spend it and what resources you are going to need to do it. Having a financial strategy will make decision planning in your business easier.


'Strategy is the direction and scope of an organisation over the long term: which achieves advantage for the organisation through its configuration of resources within a changing environment, to meet the needs of markets and to fulfil stakeholder expectations.' Johnson, Scholes and Whittington (Exploring corporate strategy)

To begin, get a summary of your mission, vision & values along with your goals and then answer the below questions you need to ask yourself to begin writing your financial strategy and begin to build your financial strategy for success



What is your current financial situation?

The questions you need to ask yourself are "How much money do you have in the business at the moment? " and "How much money do you need the business to make to support your personal financial goals".

Understanding where you are can help you plan where you need to be.

You may need to look to engage a financial planner to make sure that you have the necessary insurances, pensions and your future is provided for and be realistic on how much this may cost your business.


How are you going to manage your financial risk?

Review and evaluate the potential financial risks which may impact your business and look to mitigate them. Make a list of the issues you can foresee and possibly even review which issues your competitors have had and plan to avoid them all together.


How are you financing your business?

For product businesses you may need to make goods before you can sell them. So this will mean you may need to add money into your business or you may need to look at taking out an external loan or borrow money from families or friends. Depending on how you raise your finance you may need to look at how you repay back these loans and how they affect your future cash flow.


If you have a services business you may not need to have a large cash injection into your business to begin with. However you may need to build an experienced team and rent office space to grow your business. All of this that you may need to finance in the future, so to establish your financing options at the start of your business journey can help when these decisions arise.


Who is going to support your finance strategy?

Part of a financial strategy should be the growth of your finance team. An external accountant will help you keep your compliance responsibilities but you may need someone to offer the day-to-day tasks, for this you may need a bookkeeper, if you are going to have staff, you will need a payroll administrator.

Another consideration is whether you need a finance director to be able to oversee any finance function, ensure you have the procedures in place and work alongside you to monitor your performance and achieve your goals.


Do you have a forecast and budget?

Once your high-level financial strategy is in place you’ll need to break this down into chunks which will be the stepping stones of your business’ financial success. You will need to set a budget in place alongside regularly reviewing cash flow and a cash flow forecast.

Once you have established your budget you will need to monitor your actual performance against budget to make sure that you are on target to achieve your goals. To monitor your progress you can always implement key performance indicators into your report to make sure you can track how your business is doing and you are on course to achieve your goals.


Do you have a financial buffer?

Businesses need to have a financial buffer in case of downturn in the market or to finance a project or product in the future. However, make sure you do not have too much money in your business which is under utilised. Have a plan in place to make sure you know how much you need for a buffer and if there is more cash in your business plan on how you can utilise this by investing in the machinery or by recruitment of new staff or by purchase of the large assets which in turn will help provide more money for your business.


What about ”Exit” planning?

Exit planning is what you are going to do to leave the business you have built when it has maximised its value but there are so many ways to do this.

If you are intending to sell your business within five years you will need to have goals which are different to a business if they plan to franchise and then these goals will then be different for someone who intends to have a family run business to leave to their children. Planning your eventual exit can help plan the steps to get there and track how you do it.


Setting out on your business journey can be overwhelming, there are many different roads to take to achieve your financial goals. For the best plan you will need to build a financial strategy and review this strategy regularly to make sure you are on course for success.


If you need help with your financial strategy or monitoring your financial progress, email me at active@activeledgers.co.uk or book a call with me:


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