In the business world, a financial plan refers to an organization’s overall approach to managing funds and business resources. Even for smaller businesses, a sound financial plan is crucial for success of the company. This is especially true for any start-up business that is about to launch itself into the market for the first time.
A financial advisor may be consulted or hired to assist with financial planning. Regardless of how it is accomplished, a firm financial business plan needs to be in place so that the business can proceed with its various goals and aims.
There are various types of financial plans, which can be implemented as needed. Some uses of financial plans include:
- Accomplishing specific short term goals
- General long-term guidelines and maintenance
- Basic business considerations such as employee salary rates, benefits, and wages
- Guidelines for dealing with "emergency" situations, such as unexpected debt
- Resolving legal issues and liability for company violations
For instance, a company’s financial plan might involve a general plan for long-term goals. The same plan might contain specific provisions regarding issues like employee compensation, non-compete clauses, and anti-litigation measures.
When making a business financial plan, it’s important to consider legal issues such as:
- Anti-litigation clauses: You should spell out what will happen in the event of a conflict or legal dispute. Many companies choose alternative dispute resolution in favor of a traditional lawsuit. These measures may be described in an indemnity clause.
- Company disclosures: You should be able to control information that is considered private and confidential for your company
- Business Succession: You should anticipate what will happen in the event that you need to transfer the business to another person or organization. These are known as business succession plans and can help ensure the financial longevity of a business.
Lastly, be sure to have your financial plans reviewed, edited, and renewed as necessary over time. Conditions within and around the business can change, so it’s best to create financial plans that are firm as well as adaptable and flexible.
Financial plans are very important and can help protect the assets of your business. You may wish to hire a financial lawyer if you need help drafting, creating, editing, or replacing a financial plan. Your attorney can review any documents and information that will help in the creation of your plan. Also, your lawyer can represent you in court in the event that any legal dispute arise regarding a business plan.