When your business is growing, you might want to open another location, introduce a new service or build a business that can run without you being involved in every decision. But knowing where you want to be in five years won’t, in and of itself, give you a financial roadmap for how to get there.
What will your plans cost?
When will you need to invest?
Can your business fund that investment while meeting its existing commitments?
A fractional finance director (FD) can help you turn your ambitions into a financial plan. At Sysum Howard Duggan, our fractional FD service will help you assess what your plans will cost, when to invest and how to fund each stage of your growth. This blog explains how.
Turn your goals into a financial plan
Having goals in business is one thing. Knowing how to get there is something else entirely.
‘Grow the business’ gives you a direction, but you need to establish what that growth might involve.
Through our fractional FD service, we’ll help you translate your objectives into targets for sales, profit and cash, taking account of the people, premises and equipment you’ll need along the way.
For example, opening a second location means more than estimating its turnover. You’ll need to consider recruitment, fit-out costs and how long the location might take to cover its running costs. We can help you calculate all of that, so you can make an informed decision on whether it’s viable.
Plan and compare business investments
The order in which you make financial commitments can affect whether your plan works.
You might need to recruit a manager before expanding, purchase equipment before taking on more work or upgrade your systems before increasing your production volumes.
Those costs may arrive before the income they’re intended to support. We use financial forecasting to assess how investment could affect your profit and cash over time.
That helps you decide whether to proceed, spread the spending or wait until your business reaches an agreed milestone. You can also see how the expansion would affect the money available to run your existing operation.
We can also help you compare the costs, expected returns and risks of different options. For example, would opening another location or increasing capacity at your existing premises better support your goals?
Identify your funding needs
Once you understand the costs and timing, you can assess how much of your plan your business could fund. If there’s a gap, identifying it before you commit gives you time to consider your options. You’ll need to understand how much funding you require, when you need it and how repayments or the involvement of your investors might affect the business.
Our fractional FD service includes helping you prepare the accounts, forecasts and financial explanations you need for discussions with lenders or investors.
Test the assumptions behind your plans
Every long-term plan rests on your assumptions. You might assume demand will increase, your margins will stay the same or you’ll be able to recruit within a particular timeframe.
We’ll help you examine those assumptions and consider what could happen if your circumstances change.
For example, would a second location still be affordable if your sales took longer to build? Could you meet the repayments if your costs increased? Would a change in customer demand affect the services you intended to introduce?
Testing the alternatives can help you identify any potential weaknesses in your plan and consider your response beforehand. For instance, this may involve retaining more cash, reducing the initial investment or setting financial milestones that need to be met before proceeding.
Connect current decisions with your long-term goals
An opportunity can look attractive in isolation while making your wider plans harder to achieve.
A contract might increase turnover but tie up cash you’d earmarked for expansion. A purchase could improve output while delaying recruitment elsewhere.
Your management accounts provide the starting point for those discussions. As your fractional FD, we can help you interpret the figures alongside your forecasts to assess how a new commitment would affect your wider plans.
Review the plan as your business changes
Your plan may have made perfect sense last year. But as trading conditions, costs, priorities, geopolitics or tariffs change, it may need adjusting.
Our fractional FD support includes comparing performance with your objectives, investigating differences and updating your forecasts. If margins fall, for example, we’ll help you assess whether to adjust your pricing or investment timeline.
You should also assign responsibility for each action, so the people managing your recruitment, spending and sales understand what they need to deliver and when you’ll review the results together.
Fractional FD services from Sysum Howard Duggan
You don’t need to employ a full-time finance director to bring senior financial leadership and insight into your business planning.
Our fractional FD support fits around your business, with ongoing input or involvement around a particular project. We’ll help you understand what your goals require financially and review the decisions that move you towards them. Get in touch with our team to discuss your plans.