Financial Stability Season 1 || Financial Problems Affecting Strategic Planning || Done By @hisgeneral || 100% Power-Up

It's a very good day to every one of us. I am back again with Financial Stability Season 1 and I want to welcome you all to today's presentation. Previously we discussed about Strategic Planning and this time, we are going to be discussing yet another context I think is vital as long as financial stability is concern. Please join me as we take a look at Financial Factors That Affects Strategic Planning

Lets recall that strategic planning is the process by which owners of a businesses, organizations or companies set goals for the coming year and beyond, and ascertain how to apportion the financial and human resources of the business, organization or company to achieve set targets. The strategic choices made balances the need of company, business or organization for prevalent or present profitability with the need of investing in the future growth of the business, organization or company. A company’s prevalent or present financial problems or difficulties thus have some effects on strategic planning and may make it more difficult. With that being said, let us now consider some of the financial problems that affects strategic planning;

• Unstable Cash Flow

A business, organization or company that has unpredictable cash flow may not have funds readily obtainable to execute the selected strategies at the time set in the strategic plan. The business, organization or company may have to delay the implementation of one or more strategies. The CEOs of business, organization or company become so concentrated on finding solution to short-term financial challenges -- which include paying bills -- that they altogether neglect the strategic planning function. Consequently, the company goes from crisis to crisis sans a solid plan for the future.

• Lack of Capital

A company, business or organization that has ambitious long-range growth plans may necessarily need outside capital to have these expansion plans fully fund. Companies, organizations or businesses that lack a history of profitability or are very early stage companies can find it uneasy to qualify for debt capital from financial institutions. Good number of small businesses find it hard to get equity capital from venture capital firms or angel investors, reason being that equity investors seek for companies that has the potential for extremely speedy growth. A lack of capital can keep the owners of small businesses and CEOs of organizations and companies from being able to implement strategic plans on the very hoped scale.

• High Debt Service

Companies, business or organization that borrow money to have expansion funded can find themselves in a cash crunch supposing revenues do not grow as anticipated. Achieving the obligations to pay the principal and interest on the debt can burn much of the available cash of the company, organization or business. In a worst case scenario, the company or organization may have to modify the strategic plan rather than funding the chosen marketing or business development strategies.

• Persistent Losses

A company, organization or business which finds itself in a condition in which it is losing money every month has indeed a serious strategic dilemma. To have grown revenues and get back to profitability, the company, organization or business needs to draw up a plan with strategies to incite this growth. However these strategies needs expenditures of funds which the company, organization or business may probably not have. The business owner or the CEO of the company or organization may have to lay off employees to cut the cost of personnel in order to get back to the breakeven point. Consequently, this can result to a situation in which there are insufficient human resources to implement the strategic plan -- or the staff workload for will be so heavy such that they are not able to effectively execute the strategies.

• Low or Declining Gross Margin

A small business, organization or company may experience periods when there are rising cost of doing business which asserts pressure on the gross margin of the company, organization or business. For example, raw materials prices might soar resulting from shortages or extremely high demand. The small-business, company or organization owners then faced with the difficult option or decision of raising her own prices, which can be a reason for lose of customers. Accepting declining profits is the alternative, which can cause the cash flow of the company business, organization to be inadequate to fund the strategic plan.

• Pending Litigation

A company, business or organization that is being sued or in the near future may be sued has difficulty creating a strategic plan as a result of the uncertainty caused by litigation. The company, organization or business may have to pay notable legal fees or even damages, which mitigates the cash readily obtainable to fund the growth strategies in the plan. Another undesirable or unfavourable effect of litigation is that time and attention can be drawn away from working on strategies to keep on growing the business.

Written by:
@hisgeneral

Thanks to you all for reading through and to you @xkool24, @kinkyamiee, @kelvincole, @whitestallion, @chilaw, @bright-obias, @gentlejenny, and @samuelcynthia you are wonderful people and quite supportive, I love you all. I remain @hisgeneral and from me to you is "have a blissful day".