Managing your own finances or managing a company’s resources can be challenging for many people. For this reason, adopting financial planning measures is the best alternative to overcome obstacles and overcome difficulties that may arise during this process.
However, some people end up making common mistakes, which can have serious consequences for the stability of their personal finances or the success of their business.
Hence, to keep these mistakes from being made and resulting in ongoing issues, it is important to know about what they are and what measures to take to forestall them.
With this in mind, we wrote this article to help you optimize your financial planning, mapping and highlighting the main possible flaws. By identifying the most common mistakes, you will be armed with useful tips and practical strategies to accelerate growth and achieve the goals you desire.
Take advantage of this content and use it as a strong ally in building an effective and prosperous financial planning journey. In this post you will see the following topics:
- What is financial planning;
- Personal x business financial planning;
- Common mistakes you should avoid.
What is financial planning?
Financial planning is a methodology that aims to monitor the finances of an individual or legal entity. In other words, it is nothing more than a form of control that seeks to understand, structure and manage finances, with the aim of achieving financial sustainability and optimizing profits.
This financial planning includes a projection so that it is possible to anticipate the calculation of expenses, future profits and financial inflows.
This way, with detailed analyzes and the use of the right tools, you will be able to have a more accurate and uncomplicated view of your financial panorama. This way, you can make conscious decisions and act in a guided and effective way, always aiming to increase profitability and achieve previously defined goals.
Ultimately, it is important that you understand that financial planning will help you in the search for stability and financial security, building a solid foundation on which to base your monetary decisions.
Personal x business financial planning
These two types of financial planning are quite similar, although applied in different contexts. Both are related to financial management and aim to ensure profitability and financial security.
However, it is evident that the two categories of planning have significant differences, both in their preparation, in their application and in the results achieved.
Main differences
Some of the most important differences between personal and business financial planning are:
- Source of income: while in personal planning the main sources of income are salaries, pensions, retirement, income from bank accounts and/or investments, property rentals, among others, in business financial planning they are the sales of products and services, fees ( interest, for example), commissions, sponsorships, patents, investments, government subsidies, etc.
- Degree of difficulty: due to different factors (budgets, cash flow, inventory control, financing, investments, etc.) business planning tends to be much more complex than personal planning.
- Proportion: regardless of the size of your business, corporate financial planning typically involves more income and also more expenses than personal planning. This is because it generally covers a range of customers, as well as different sectors, employees and suppliers.
- Strategies: the objective of planning your personal finances is commonly linked to reasons such as increasing wealth, financial stability and a comfortable future, so the strategies adopted are directly linked to this. Business-wise, goals are usually related to the growth and expansion of the enterprise .
- Risk containment: personal financial planning takes into account risks such as illness (your own or that of family members), unforeseen events linked to cars and residence, accidents, layoffs, etc. Corporate concerns include threats such as changes in taxation, regulatory changes, market changes, contractual fines, competitors, among others.
Common mistakes you should avoid
Since you have a better understanding of the main differences among personal and business financial planning, the opportunity has arrived to learn about probably the most widely recognized mistakes made by managers and learn how to settle them.
Mix personal and corporate finances
This is a very common mistake in the corporate environment, mostly in new companies and small businesses.
Mixing personal and corporate finances can bring serious problems to the financial health of your enterprise. It can bring accounting and tax difficulties, apart from causing financial imbalance, hindering goal achievement, and poor decision-making.
To solve this problem it is necessary to take some financial planning measures . They are: disassociate bank accounts, carry out transactions separately, maintain accounting records, reimburse appropriately when it is necessary to use the business balance for personal purposes and vice versa, keep the documentation of both accounts updated and separately define goals and strategies to be be followed.
Wrong pricing
Pricing your products and/or services incorrectly can seriously harm your budget. Therefore, it is necessary that you do not act arbitrarily and carry out this procedure with great care.
- Calculate the costs of production, transportation, storage, preparation time, among others;
- Take into account indirect costs, such as marketing, rent, electricity and water bills, etc.;
- Evaluate competition and market changes;
- Make adjustments according to needs and seasonality;
- Define how much you want to profit from that particular product.
Lack of financial reserve
Not having a financial reserve can cause stagnation in your business growth, harm your finances and lead to lost opportunities.
Therefore, cut non-essential expenses, set clear goals, have a crisis containment plan and automate routine processes .
Have only one source of income
If your business’s only source of income suffers an abrupt reduction or is interrupted, this could result in a considerable reduction in profits. This situation can generate financial challenges and even lead your company to bankruptcy.
To prevent this from happening, your financial planning should aim to diversify your sources of income and, if possible, your products and services, build loyalty and improve relationships with customers, invest in innovations for your niche and pay attention to new developments. market tendencies.
Lack of control of internal operations
This last oversight is one of the most common and most harmful to the financial health of your business. Because not having control over your company’s internal operations is a serious mistake that can cause several problems and negative consequences.
This is because, when there is no adequate control of the company’s operations, it becomes difficult to monitor costs, identify waste, control inventories and ensure process efficiency. Which can lead to financial losses, internal disorganization, delays and customer dissatisfaction.
Therefore, you need to create effective business management strategies. The first step is to centralize all the information in one place, to understand the nuances and closely monitor your company’s processes.