GUIDES

Financial Planning for Small Construction Businesses

Financial planning is critical to every small business. In order to succeed, businesses need to maintain a strong financial muscle and have an understanding of the company’s financial wellbeing.

February 02, 2021

But, still, it becomes extremely easy for businesses to postpone working on and bettering their financial wellness. Although it can seem a tedious task, financial planning is a commitment to betterment and growth. Think of financial planning as a game plan rather than as a laundry list.

How Do I Start Planning?

Prioritize: The first step to planning is simple: prioritize. People often forget to or disregard spending time dedicated to healthy financial planning. By re-evaluating your business’s situation, you can start to plan how to tackle issues and accelerate company growth. Putting these issues at the forefront is the first step to planning. Create a plan that prioritizes your business’s wellbeing. Reorganize: Assign some time with regular cadence to review performance and plan ahead. Start by organizing all of your finances in one place and keeping track of numbers (debt, invoices, sales, outstanding payments) and related documents. Build: Gather your information and establish where you stand financially. If you have an accountant, meet with them to gain a better understanding of your financial situation. Use this to better monitor your three basic financial statements. Monitoring these will allow you to see the basic principles of each one and how the money and capital flow in and out of your business.

Create a Course of Action

After you have gathered all of the information, use this as a starting point for establishing steady growth. The financial understanding you gain from planning should be used for establishing short and long-term goals. For instance, if you know your business struggles to monitor the flow of cash in and out of the company, focus attention on this issue. You can later allow this new foundation to shift focus to a new area of improvement. This does not mean your business is plagued with financial burdens or issues, rather it allows for businesses to more effectively achieve growth. Let’s see what the next financial steps are:

Research: Make sure that your plans for growth align with the trends of the market and industry. Reach out to your team, colleagues, and clients to gauge what is currently working in the market and what is projected to come. Doing this research will help in forming realistic, productive goals.

Find Resources: Resources extend beyond money: you must consider time, qualified workforce, raw materials, sales efforts, amongst others. Once you define your resources, you can quantify them to determine cost. Don’t forget that this cost is increased by the possibility of needing to train employees on corporate standards. Resources and related criteria will help guide you once you’ve defined them, and taken advantage of external aid, as well.

Set SMART Goals: Setting goals after gathering your resources and information allows you to put your ideal changes into action. One strategy is to set SMART goals: specific, measurable, achievable, relevant, and time-bound. Narrowing down and adding specificity to your goals will help positively direct you. You can better gauge what needs to be done without over or under extending your business.

Manage Change: New developments and planning will lead to changes in your business. It is important to monitor the new tides of your financial wellbeing. If you are on track, continue to push forward and achieve your goals.

Tips to Remember:

A new journey in finance may seem scary, but recognizing your business’ strengths and weaknesses will help you prepare for increased growth and stability.

By being hands-on and communicating with colleagues and financial advisors, you will be able to take on more projects and extend your business wider.

Remember that preparation also includes emergencies and insurance, so keep these in mind, as well.

BlueTape prioritizes the wellbeing of small businesses, and we encourage you to take advantage of your resources so you can reach your goals. Get started with us, and unlock new resources.

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All loans originated on the Bluetape platform are underwritten and made by CBW Bank, member of FDIC.