­What Does Strategic Financial Planning Mean & Why It’s Vital?

Strategic Financial Planning – Why is it important?

Strategic financial planning is the process of determining how to best manage a business financially to ensure goals and objectives are achieved for both the short-term and long-term.

Sound business financial planning considers every aspect of a business’s operations. This includes the interwoven impact each aspect has on the overall financial position of the company.

What does it involve?

Strategic financial planning involves a 360º, whole picture evaluation of company or business operations. This is essential in order to create a comprehensive business financial plan. Elements of the financial plan can include:

  • Budget development, cost systems, and management reports.
  • Resources required to achieve objectives (cost, type, amount).
  • Working capital management (inventory, receivables, payables, and cash).
  • Employee structure, payroll, and benefits.
  • Risk identification and management.
  • Tax planning.
  • Succession planning.

As a business owner, your personal finances will be considered at the same time and incorporated into the plan.

Why is business financial planning so important?

A strategic financial plan is a vital aspect of business planning. The financial components provide the larger business plan with a solid foundation for sound decision-making.

The numbers provide financial benchmarks for the operation of the company, making sure the objectives set are achievable. This provides measurement points by which management can determine whether progress is on track.

A sound financial plan also helps to set performance targets for the organisation, and provides a framework for rewarding staff.

How do you get started?

To help guide you on the strategic and financial planning process, we have broken down tangible steps to help get you there:

1. Figure out where your business is financially

It’s important to understand where you are currently on your financial journey. This gives you a starting point so that you can make clear decisions about where you want to go.

You should lay out your business goals considering:

  1. short term goals.
  2. medium-term goals, and;
  3. long term goals.

In addition, you should understand your business finances.

  • How much do you need for your living expenses?
  • What are your debts and repayments?
  • How much more money you can make?
  • How much can you save?
  • Asset allocation.
  • Asset liquidity.

Make sure you have a clear understanding of your strengths and weaknesses. This process can help you reach the next step.

2. Focus on what’s important – setting your financial objectives and goals

Your goals and objectives will be the guide to the financial plan. Their purpose is to provide a roadmap for your financial future. When choosing goals, remember that they should be SMART:

  • Specific – goals should be clear and concise.
  • Measurable – goals should be agreed upon and documented with your financial adviser to assist you with measuring your progress.
  • Achievable – you must separate your needs from your wants. 
  • Relevant – goals should be reviewed periodically to capture changing circumstances and to ensure they remain relevant.
  • Time-Bound – goals should have a clear timeframe.

Once you identify these main points, you will understand what you should ultimately be focusing on right now in order to achieve your financial objectives and goals.

3. Gather your business financial and personal information

The success of your financial plan will depend on the quality and clarity of the information communicated to your adviser during the financial planning process.

Your financial adviser will complete a detailed fact-find session to capture all relevant information in relation to your personal and business finances. This will include:

  • Income and expenditure.
  • Assets and liabilities.
  • Risk attitude, tolerance, and capacity.

4. Analyse your personal and business financial information

Your financial adviser reviews the information provided in the previous steps and uses it to produce a report that reflects your current financial profile. Your attitude, tolerance, and capacity for risk are assessed using a psychometrically designed risk-tolerance questionnaire in relation to investment assets. This is also analysed to assess your asset allocation for investment or pension goals.

5. Implement and review the financial plan

Once the analysis and development of the plan is complete, your financial adviser will outline the recommended courses of action. This can involve implementing:

  1. A new pension or investment strategy.
  2. Changing debt provider.
  3. Additional life or serious illness insurance.
  4. Income and expenditure adjustments.

Your Financial Adviser may carry out the recommendations or serve as your coach. They can coordinate the process with you and other professionals such as accountants or investment managers. They may also handle the interactions with financial product providers.

6. Circle back

Financial plans, if done correctly, are designed to work well for now, but not forever. Circumstances and goals can change, and so should your plan.

Financial planning is a dynamic ongoing process that requires continuous monitoring. A review of the recommended actions in the plan should take place regularly. Your financial goals stated in the plan should be reviewed annually to take into account of changes in income, asset values, business goals, or family circumstances.

As part of the ongoing review, it is vital to set up a timeline to check in and ensure that you are still on track.


Financial planning that follows a properly defined and documented process will give the greatest chance of a successful outcome. It is important to remember, however, that financial plans do not guarantee financial security or wealth. They are designed, though, to provide an opportunity to pursue both using proper analysis, discipline and expertise. Book an appointment with us now to start the creation of your strategic financial plan.

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