Financial Plans

Once you know where you're at today, you're in a position to develop some goals for the future. Are you looking to set up your own business in a few years? Retire? Put your kids through university? Most of us have a number of long-term goals we'd like to work towards. But we may not be able to achieve them all. A financial planner can help you to clarify your own attitudes and values, which is an important step towards setting priorities for the future. Only you can decide whether it's more important to provide for your children's education, help support elderly parents or fulfill your dream of early retirement.

But a financial planner can help you to explore your own values in a way that will make it easier for you to see where your priorities really are. 3. Analyze Your Current Situation and Prioritize Goals Now you need to take a good hard look at your current situation in relation to your goals to see what problems are standing in your way. Some of these may be quite apparent to you. Perhaps you know that you don't save any money towards your goals, or that you're so deep in debt, there isn't anything extra to save.

Poor money management skills are probably the issue here. You may need the assistance of a professional to identify other problems. Are you paying too much tax? While all of us feel that we are, a financial planner will know if there are specific tax-reduction strategies you're missing. Are you adequately insured? A financial planner can calculate the benefit that you or your survivors would receive from your current coverage and compare this to the amount needed. 4. Develop Financial Plans and Strategies Develop a strategy to address the problems.

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With a professional planner, this will usually take the form of written recommendations and alternative solutions. On your own, you'll probably mull over the problem and decide in your head what you're going to do about it. It's still a good idea to commit your decision to paper, however. This formalizes your course of action and gives you something to refer back to after implementation. It's important that your strategy be specific. Saying that you're going to start saving money is not a strategy -- it's a recipe for failure.

You need to identify exactly how much you're going to set aside every week, every pay cheque or monthly. You also need to determine how you're going to do this. Will it be by participating in your company savings plan via payroll deduction? Or will you arrange with your bank to transfer money into a money-market fund each month? What is your timeline for making these arrangements? How will your savings be invested once they start to accumulate? All these factors should be incorporated into your strategy. 5. Implement Your Financial Plans Putting your plan into action is the next step.

The best plan in the world isn't worth anything if it gets filed away in a drawer. Unfortunately, this often happens when people go it alone. We all have a tendency to procrastinate, and financial matters often get left behind in the crush of day-to-day responsibilities. A financial planner can be of help here, too. Realistic timeframes can be developed for the various steps that must be completed. The planner may be able to perform some of the action steps for you, and can follow up with you on other items to make sure that timeframes are adhered to.

6. Monitor Progress and Revise Your Financial Plans Finally, a financial plan is never written in stone. Circumstances change, and your plan may need to be adapted so that you stay on track with your goals. You should review your plan at least once a year to assess your progress and see if changes need to be made. Your net worth statement can be a helpful tool here. Use it as a benchmark to measure your progress. Has your net worth increased by as much as (or more than) you expected? If not, you need to find out why and take some corrective action.

A financial planner can also provide input into changes in legislation and new investment products that you may want to incorporate into your planning strategies. Source: Ykconsultancy, 2006 APPENDIX 5 The 5C's of Finance: Business Loans By Paul Allen Capital is the money you personally have invested or will invest in the business. When applying for a business loan the prospective lender wants to see what kind of risk are you willing to make to see this business succeed? The more you personally have invested in the business the more likely you are to work your hardest to make sure the business is a success.

If you are not willing or prepared to make a sizable financial investment in the company, more than likely the lender will not be willing to take a risk either. If your business is already operating you will be asked to provide personal and business records showing every detail of the business including tax records, accounts payable, and accounts receivable. Collateral is personal and or business assets that you are willing to put up as security in the event the business cannot repay its loan. The bank wants to know there is a second source of repayment.

Equipment, buildings, accounts receivable, and in some cases, inventory is considered possible sources of repayment of the business loan, anything the bank can sell for cash. Both business and personal assets can be sources of collateral for a business loan. Collateral should not be confused with a guarantee. A guarantee is when someone else signs a guarantee document promising to repay the loan if you can't. Some lenders may require both collateral and a guarantee as security for a business loan. Conditions refer to the purpose of the business loan.

Will the money be used for working capital, additional equipment, or inventory? Other conditions the lender will consider are the economy and conditions not only within your business but also in businesses that could affect your business (your suppliers and or service companies included). Character is the impression you make on the potential lender. The lender determines whether or not you can be trusted to repay the business loan if granted. Some of the things the lender might ask for are your educational background, your experience in business and in your industry.

More than likely they will request references for you and the background and experience of your employees may also be considered. Capacity to repay the business loan is the most important of the five factors. The prospective lender will want to know exactly how you intend to repay the loan. The lender will consider the cash flow from the business, the timing of the repayment, and the probability of successful repayment of the loan. Payment history on other credit relationships, personal and business, is considered an indicator of future payment performance.

A business must be able to pay all its debts, not just its loan payments, as they come due. Applicants are generally required to provide a report on when their income will become cash and when their expenses must be paid. This report is usually in the form of a cash flow projection, broken down on a monthly basis, and covering the first annual period after the loan is received. Before applying for a business loan keep the 5 Cs in mind and be prepared. Taking time to organize, have your plans in writing, and a positive attitude will take you great steps towards receiving the financial backing you are seeking for your business.

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