Do you own a small business in the construction industry? Is your business growing a little bit mightier every day?
If so, then you probably appreciate the importance of financial planning. But did you know that financial planning is more than just tax prep and bookkeeping?
At its best, financial planning is a powerful tool for growth. Planning generates insights that help you optimize your daily operations and make your money work more effectively toward building and sustaining your business’s prosperity.
In this blog post, we’ll explore the various ways in which financial planning can be leveraged to fuel sustainable business growth.
Here are a few of the most compelling reasons to embrace financial planning as a key tool for growth in your construction business.
Improved Cash Flow Management
One of the most notable benefits of financial planning for construction businesses is improved cash flow management. Cash flow management involves the process of understanding and improving the manner in which funds flow into and out of your company’s financial accounts.
Cash flow management is especially important for construction companies, which often have large amounts of money tied up in inventory and accounts receivable. This situation makes it difficult to manage cash flow, since your available funds may lag significantly behind your real assets.
To keep money moving when and how you need it to, financial planning is critical. Financial plans for operational expenses and cash flow help business owners to accurately forecast their liquidity needs. Planning also helps you know when it’s time to increase borrowing, or when it’s safe to ramp up purchases and investments.
Reduced Cost of Borrowing
Financial planning may lead to a direct reduction in the cost of money borrowing for a construction business.
If your business needs to take out loans in order to cover operating costs, the associated fees and interest can be substantial. Financial planning helps address these costs in several ways.
First, financial planning puts you in a more informed position regarding your company’s financial capacity. You won’t be stuck borrowing more than necessary just because you aren’t sure how much cash is really required. Nor will you end up taking out last-minute loans because a lack of planning resulted in your account balances suddenly bottoming out.
Secondly, financial planning equips you to negotiate better terms with your lenders. You can use your detailed reporting to demonstrate your company’s capacity to repay the loan, resulting in better chances of approval and lower interest rates.
Financial planning can also be used as a tool for helping a construction business owner increase their company’s profitability.
A well-crafted financial plan takes into account all of a company’s revenue streams, assets, and expenses. With the help of their accountant or financial planner, a business owner can use their plan to make wise choices about where to allocate resources in order to boost profits and cut costs.
Does your long-term business plan involve the participation of outside investors? If so, financial planning is an essential tool for attracting investment.
Investors want to connect with a business owner who has competence and vision regarding the company’s financial future. To demonstrate these qualities, it’s essential to present a professionally-prepared financial plan that shows investors a clear path toward continuous growth and stability.
Peace of Mind
Finally, financial planning is an essential process to engage in to achieve peace of mind concerning the health of your business. After all, continued success is never guaranteed, but it’s only ever possible if you effectively plan ahead.
As a business owner, it’s crucial to know that your books are in order and that you’ve got a solid financial plan in place.
To gain the confidence that comes from excellent financial planning, be sure to work with an accounting firm that specializes in working with businesses in your industry and size class.
Plan for Growth with Financial Planning Services from Stratlign
At, Stratlign we’re a full-service accounting firm that specializes in the construction and trade industries. We help small and medium-sized businesses with bookkeeping, tax preparation and filing, and financial planning.
To get started with financial planning for your construction business, contact Stratlign today to book a 15-minute call with our team of money experts.