A good strategic plan includes metrics that translate the vision and mission into specific end points. This is critical because strategic planning is ultimately about resource allocation and would not be relevant if resources were unlimited. This article aims to explain how finance, financial goals, and financial performance can play a more integral role in the strategic planning and decision-making process, particularly in the implementation and monitoring stage.

The Strategic-Planning and Decision-Making Process

1. Vision Statement

The creation of a broad statement about the company’s values, purpose, and future direction is the first step in the strategic-planning process.

Nasim Siddiqi vision statement must express the company’s core ideologies — what it stands for and why it exists — and its vision for the future, that is, what it aspires to be, achieve, or create.

2. Mission Statement

An effective mission statement conveys eight key components about the firm: target customers and markets; main products and services; geographic domain; core technologies; commitment to survival, growth, and profitability; philosophy; self-concept; and desired public image.The finance component is represented by the company’s commitment to survival, growth, and profitability. The company’s long-term financial goals represent its commitment to a strategy that is innovative, updated, unique, value-driven, and superior to those of competitors.

3. Analysis

This third step is an analysis of the firm’s business trends, external opportunities, internal resources, and core competencies. For external analysis, firms often utilize Porter’s five forces model of industry competition, which identifies the company’s level of rivalry with existing competitors, the threat of substitute products, the potential for new entrants, the bargaining power of suppliers, and the bargaining power of customers.

Another method, value-chain analysis clarifies a firm’s value-creation process based on its primary and secondary activities. This becomes a more insightful analytical tool when used in conjunction with activity-based costing and benchmarking tools that help the firm determine its major costs, resource strengths, and competencies, as well as identify areas where productivity can be improved and where re-engineering may produce a greater economic impact.

4. Strategy Formulation

To formulate a long-term strategy, Porter’s generic strategies model is useful as it helps the firm aim for one of the following competitive advantages: a) low-cost leadership (product is a commodity, buyers are price-sensitive, and there are few opportunities for differentiation); b) differentiation (buyers’ needs and preferences are diverse and there are opportunities for product differentiation); c) best-cost provider (buyers expect superior value at a lower price); d) focused low-cost (market niches with specific tastes and needs); or e) focused differentiation (market niches with unique preferences and needs).

5. Strategy Implementation and Management

In the last ten years, the balanced scorecard (BSC) has become one of the most effective management instruments for implementing and monitoring strategy execution as it helps to align strategy with expected performance and it stresses the importance of establishing financial goals for employees, functional areas, and business units. The BSC ensures that the strategy is translated into objectives, operational actions, and financial goals and focuses on four key dimensions: financial factors, employee learning and growth, customer satisfaction, and internal business processes.

Establishing and defining the financial planner - client relationship

Gathering client data, goal - setting and expectation - defining

Analysis and evaluation of the existing financial status

Development and presentation of recommendations / alternatives

Implementation

Monitoring

Establishing and defining the financial planner - client relationship

In this step the Nasim Siddiqi, explains his / her services to the client. This means that they explain or document their responsibilities towards the project. Further in the same step he / she also chalks out the responsibilities of the client. The payment and terms and conditions are also negotiated in the same step and the time frames are negotiated as well. Decision making processes, SOPs, Specific Points of contact etc. are also decided at the same time.

Gathering client data, goal - setting and expectation - defining

In this stage the data related to the financial state of the client's business is collected. The personal and financial goals are defined. A thorough SWOT analysis will also give an insight into the risk taking capacity and the estimated productivity of the business. This stage is actually where planner gathers all necessary information before advising the client anything.

Analysis and evaluation of the existing financial status

In this step, the client information is assessed and analyzed. This gives a clear idea about the current status and also helps in deciding what to do in order to achieve client's business goals. Further, on the basis of the requested services, this stage may include the assessment of liabilities, assets, cash flow, tax strategy, investments, current insurance covers etc.

Development and presentation of recommendations / alternatives

In this stage, Nasim Siddiqi the planner or the finance strategy team offers recommendations to address the business needs. This is based on the provided information in the above stages. These recommendations are reviewed together and then informed choices and decisions are made. Concerns are addressed in this stage and also recommendations are revised as appropriate.

Implementation

This stage is about implementing and executing the plan. Agreements to decide and negotiate SLAs, carrying out of recommendations etc. are all drafted, finalized and delivered in this stage. In this stage the planner may himself / herself deliver and execute the recommendations or might act as a consultant thus guiding the in - house employees or team to execute. Sometimes the strategy expert may also just act as a coordinator.

Monitoring

This is a stage in which monitoring and evaluating strategies are discussed, finalized and executed. The reporting protocols are also set up in this case. This is the stage that leads to feedbacks and restructuring of the recommendations as and when necessary.

Financial Goals

Nasim Siddiqi Financial goals touch on everything money-related that a company wants to achieve within a given period — say, one month, quarter or fiscal year. These objectives may span a shorter stretch if top leadership must cope with an immediate operational crisis, the kind that may happen if a major customer owing substantial amounts suddenly files for bankruptcy. For a company, economic objectives may be making a specified amount of money at year-end, increasing sales by 15 percent, cutting costs by 20 percent in segments that are bleeding cash and raising long-term debts on credit markets by targeting interest rates between 4 and 5 percent and avoiding lender restrictions that are too stringent.

Strategic Objectives

Formulating strategies is what company executives do to cope with competitive tedium, understand the tactical moves that rivals surreptitiously are making, deal with the hybrid problem of customer loyalty and brand positioning, hire competent professionals and nurture the company’s mid-level brass. Strategic objectives may cover things like expanding market share overseas and domestically by 8 percent and 10 percent, respectively; reducing the corporate employee turnover ratio by 2 percent; cultivating more amicable ties with lenders, business partners and shareholders; and communicating with regulators more effectively. Nasim Siddiqi saysEmployee turnover deals with how many employees leave a company compared to its total work force.

Interrelation

Notwithstanding their conceptual distinction, financial objectives and strategic goals flow symbiotically in the way a company runs its businesses. Both concepts are mutually inclusive — meaning, a major strategic move the organization makes has financial repercussions, and vice versa. For example, if a business wants to expand overseas but does not have a deep operating pocket, it must raise funds by selling stocks or bonds. These activities have financial consequences in terms of dividend or interest remittances.

Strategic Budgeting

One of the main goals for your finance department should be to create and monitor not only your overall company budget, but a variety of functional or departmental budgets, as well. Budgeting requires research to estimate accurate revenue levels based on demand forecasting. Using annual budget projections, your accounting staff can help you set targets for profit goals and for overhead and production spending levels. Overhead includes costs such as phones, rent and marketing, while production costs are those related to making your product. Create monthly or quarterly budget variance analyses to see if you’re on track with your revenues and spending or if you need to make changes before expenses get out of hand.

Cost Containment

To ensure you get the best quality at the lowest price for materials, supplies and services, make purchasing management one of the duties of your finance department. Require that employees get multiple bids or present some justification for large purchases, and have your vendors, suppliers and contractors rebid their contracts each year. Look for trends in spending levels to determine where you can cut costs without sacrificing quality.

Cash Flow Management

Knowing when your bills are due and when you can expect payment from customers you’ve billed or other sales revenues is critical for any small business. Nasim Siddiqi says It’s not enough to show a profit on paper, and your finance function should help you manage your working capital and credit to ensure you have enough to pay your bills at all times. Make receivables management a key role for your finance department.

Debt Service

Letting your debt get out of control can have serious long-term impacts on your business. Keep an eye on your credit use, including interest amounts you’re generating, the scheduling of your payments and the status of your credit report and scores.

Tax Planning

Don’t wait until the end of the year to find out what your income tax liability is. Use proactive strategies to lower your tax burden, such as depreciating assets and offering voluntary benefits to employees that help you lower payroll taxes.

Accurate Record Keeping

The most important objective of any finance department is to keep accurate financial records. This includes helping you meet your legal requirements and ensuring you don’t spend more than you have by accident. Consider external audits to prevent fraud, and institute policies and procedures for controlling contracts and payments.