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1. Explain the financial planning process in an engineering business
Financial Planning Process
Step 1: Identify, Establish and Prioritise Goals
Financial Planning is about achieving your goals: Create revenue, maintained profit margin, expanding the business, maintained reputation. Because specific goals are usually tied to a certain point in the future, this step will also help establish your time horizons for achieving your goals.
Step 2: Gather Financial Data
During this step of the process we gather all of the pertinent information to assess your current situation. Company’s present circumstances will have a significant impact on the plan that’s best for your company. Examples of information which may need to be gathered includes your profit and loss statement, bank and brokerage statements, insurance policies, estate documents, and your most recent tax returns.
Step 3: Analyse and Evaluate Financial Data
Analyse your information to assess company’s current situation and determine what options you may have and what actions must be taken in order to meet your goals. As the picture develops, specific shortfalls or excesses will come into focus, along with areas needed to change.
Step 4: Create a Plan
During this step, a plan is developed which serves as a roadmap as to how to achieve your specific financial goals. Your plan may call for immediate changes, such as diversifying your revenue and expenditure, investments, shifting the company asset allocation, consolidating accounts, optimising your insurance coverage, or drafting estate planning documents. Your plan may also call for longer-term actions such as altering the expenditure and saving habits over time.
Step 5: Implement the Plan
The agreed upon plan details are established and put into place. Implementing your plan may involve