Corporate financial planning is the process of developing short and long term financial goals for your business.
Public companies do corporate financial planning regularly out of necessity. Established private companies almost NEVER do corporate financial planning. The direct and indirect problems and inefficiencies a lack of corporate financial planning creates within a company can be numerous. They include:
1. Lack of direction and focus from the bottom up
2. Fatigue or lack of energy
3. Lack of accomplishment and metrics for management and employees
4. Poor buy-in from employees
5. Spending too much resources on low value enhancing ideas
6. Incorrectly pricing the products or services
7. Missed growth or value creating opportunities
8. Lazy strategic thinking
9. NEVER REACHING OR EXCEEDING THE POTENTIAL
Corporate Financial Planning never seems to get done for two primary reasons: Private companies are not required to do it. Think how much is spent on annual audits and reviews and compare that to how much is spent on proactive planning? Corporate financial planning is seen as a cumbersome, labor intensive exercise, like budgeting, that is not going to produce any insight, change in direction, or results.
Nothing could be farther from the truth. Companies that practice dynamic corporate financial planning get more focused, make better decisions, and gain the confidence and peace of mind to know they are on a path that creates the results they want. Most importantly, Dynamic Financial Planning also gives companies a financial baseline to make good decisions and find ways to exceed their current expectations. Once a financial plan for your current business is created, the second step is to have some fun and play 'what-if.' For example, many entrepreneurial companies are undercapitalized, and that lack of funding can constrain a business from reaching its full potential. With the help of disciplined planning and intelligent use of resources, achievement of great success is a natural result.