Topic - How a good financial planning help an

organization in achieving long term sustainability.

Paper Name - Financial Management
MBA SEMESTER - II
(2021-23)

SUBMITTED BY
Name – Richard Tirkey
Registration No - 21104710017
What Is Financial Planning?
Financial planning is the practice of putting together a
plan for your future, specifically around how you will
manage your finances and prepare for all of the
potential costs and issues that may arise. The process
involves evaluating your current financial situation,
identifying your goals and then developing and
implementing relevant recommendations.
Financial planning is holistic and broad, and it can
encompass a variety of services, which we detail
below. Rather than focusing on a single aspect of your
finances, it views clients as real people with a variety
of goals and responsibilities. It then addresses a
number of financial realities to figure out how to best
enable people to make the most of their lives.
Financial planning is not the same as asset
management. Asset management generally refers to
managing investments for a client. This includes
choosing the stocks, bonds, mutual funds and other
investments in which a client should invest their
money.
However, the same professionals who offer asset
management services can also offer financial
planning. A financial planner is effectively one type of
financial advisor. Advisors can earn certifications
focused on financial planning, the most notable of
which is “certified financial planner (CFP).”
Definition of Financial Planning
Financial Planning is the process of estimating
the capital required and determining its
competition. It is the process of framing
financial policies in relation to procurement,
investment and administration of funds of an
enterprise.

Types of Financial Planning

A financial planner may offer a variety of services to
you. These services will often be considered in concert
with one another. This helps the planner put together
an overall plan that considers all aspects of your
current situation and future aspirations.
➢ Tax planning: Financial planners often help clients
address certain tax issues. They can also figure out
how to maximize your tax refunds and minimize
your tax liability. Certain advisors may also be able
to actually help you with preparing
your taxes and filing your annual taxes.
➢ Estate planning: Estate planning seeks to make
things a bit easier for your loved ones after you die.
Preparing a will may be part of a financial planner’s
services. Estate planning also helps prepare for any
estate tax you may be subject to.
➢ Retirement planning: You presumably want to stop
working some day. Retirement planning services
help you prepare for that day. They ensure that
you’ve saved enough money to live the lifestyle
you want in retirement.
➢ Philanthropic planning: It’s always nice to give
something to people who need it or help a cause
close to your heart. Financial planning can help
you ensure you’re doing it efficiently and getting
all the tax benefits you’re eligible for.
➢ Education funding planning: If you have children
or other dependents who wish to pursue a
college degree, you may want to help them to pay
for it. Financial planning can help make sure you
are able to do so.
➢ Investment planning: Though financial planning
doesn’t include the actual management of your
assets; it can still help with
your investment portfolio by mapping out how
much you should be investing and in which types
of investments.
➢ Insurance planning: A financial planner can help
you evaluate your insurance needs. Some
financial planners are also licensed insurance
agents and can sell you insurance themselves.
However, they’ll likely earn a commission, which
would create a conflict of interest.
➢ Budgeting: This is perhaps the cornerstone of
financial planning. A planner can make sure you
are spending the right amount given your income
and can also make sure that you aren’t going into
debt.
Objectives of Financial Planning
Financial Planning has got many objectives to
look forward to:

a. Determining capital requirements- This

will depend upon factors like cost of current
and fixed assets, promotional expenses and
long- range planning. Capital requirements
have to be looked with both aspects: short-
term and long- term requirements.

b. Determining capital structure- The

capital structure is the composition of capital,
i.e., the relative kind and proportion of capital
required in the business. This includes
decisions of debt- equity ratio- both short-
term and long- term.

c. Framing financial policies with regards to

cash control, lending, borrowings, etc.

d. A finance manager ensures that the

scarce financial resources are maximally
utilized in the best possible manner at
least cost in order to get maximum returns on
investment.
Importance of Financial Planning
Financial Planning is process of framing
objectives, policies, procedures, programmers'
and budgets regarding the financial activities of
a concern. This ensures effective and adequate
financial and investment policies. The
importance can be outlined as-

1. Adequate funds have to be ensured.

2.Financial Planning helps in ensuring a

reasonable balance between outflow and
inflow of funds so that stability is maintained.

3.Financial Planning ensures that the suppliers

of funds are easily investing in companies
which exercise financial planning.

4.Financial Planning helps in making growth

and expansion programmers' which helps in
long-run survival of the company.

5.Financial Planning reduces uncertainties with

regards to changing market trends which can
be faced easily through enough funds.

6.Financial Planning helps in reducing the

uncertainties which can be a hindrance to
growth of the company. This helps in ensuring
stability an d profitability in concern.
Financial Sustainability
At Advance, we define financial
sustainability as the ability to start, grow and
maintain your staffing business with short-
and long-term financial stability. It is
amazing how many otherwise savvy staffing
operators rely solely on their sales or HR skills
to grow their business, and don’t really
understand where they are or where they’re
headed.
While temporary staffing entrepreneurs give
a variety of reasons for starting their own
venture – being their own boss, the
satisfaction of getting people jobs, fulfilling a
need in the marketplace – you won’t be in
business long without healthy profits
and sustainable growth.
1. Access to Capital
Trust us on this one, it takes money to make
money, and you’ll need a lot of it to run a
successful staffing business. Typically, you’ll
need initial startup capital to get your staffing
firm up and running, ongoing working capital
to maintain your day-to-day operations and
investment capital to put back into your
company and support growth.
To access this capital, you can either self-
finance, fund through equity infusion, take a
loan out at a bank or work with a specialty
finance agency

2. Profitability
When it comes to profitability, balance
counts. If your profitability is too low, it may
have a negative impact on your cash flow
and increase stress throughout your
organization. Low profits leave no room for
revenue or expense fluctuations and limit
your ability to reinvest, which can ultimately
compromise your financial sustainability.
On the other side of the token, if your
profitability is too high it may open you up to
undercutting by lower-priced competitors,
especially MSPs. Sustained undercutting
could lead to destructive price wars in the
market and contribute to overall financial
instability.
3. Reporting
Taking the time to assess your staffing
business is critical to healthy, sustained
growth. Creating a plan to review your
finances on a regular basis allows you to
adjust in time to reverse a negative trend or
capture a unique positive opportunity.
Whatever your method of secured capital,
solid financial reporting will be required to
secure increased levels of capital support.
And when it’s time to sell your business or
grow through mergers and acquisitions,
solid financials are a must.

4. Planning
“If you don’t know where you are going,
you’ll end up someplace else.” – Yogi Berra
It can be surprisingly easy to stray from your
set path to sustainable growth if you do not
have your own personal business plan to
keep you on course. Your financial planning
should be flexible enough to allow for
market changes and unexpected
opportunities, but strong enough to keep
you from veering into
dangerous, unsustainable territory.
Action Steps
For the long-term financial health of your
staffing business, take these Action
Steps today:
➢ Review your current and future capital
needs and determine how you will address
your anticipated growth
➢ Analyze and work to balance your
profitability
➢ Assess and improve your reporting and
planning capabilities
➢ Evaluate and understand the purchasing
processes of your customers and key
prospects

Conclusion:
Financial Planning is an important aspect of the
individual as well as business life. This article
gives you an insight into what financial planning
comprises and what are its key aspects.