What is Business Financial Planning? Definition
Business financial planning (BFP) is the process of creating a financial roadmap to help a business achieve its objectives.
For example, a business might want to increase profit by 10% in a given year.
To that end, they will embark on some business financial planning to determine areas to improve sales, cut costs or improve profit margin in order to achieve that goal.
Who Conducts Business Financial Panning (BFP)?
BFP is performed by both startups and established companies.
When a new business is launched, strong business financial planning is an important part of standing up that business.
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A new company needs to have a firm grasp of the numbers at play in their industry.
They should have a plan for how much money they need to run their operation, how much money they need to make to stay operational and a firm grasp of where all that money will come from.
Business financial planning is also very important for established companies.
Every month, quarter or year a business will have goals that they are working towards, and a strong plan helps them to achieve those benchmarks.
Business financial planning is also important when a business plans to take a significant business strategy, such as expanding a product line or expanding into a new territory. A clear financial plan can help managers understand if these types of strategic objectives are feasible.
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