The financial strategy can be defined as the action plan intended to allow the company to achieve financial balance . Thus, the objective of the financial strategy evolves whether it is in the short, medium or long term:
In the short term : the goal of the financing strategy is to enable the business project to see the light of day. Indeed, before a product or service is launched, its development can take time and require significant funding. At this stage, the financing strategy therefore consists in seeking the various forms of financing that can be envisaged to start the activity. Are you looking for help to finance your project? Do not hesitate to inquire about assistance for business creation .
In the medium term: in the medium term, the objective will be to improve existing products or services or to develop new branches of activity. For this, the financing strategy may consist of relying solely on the company’s profits or, conversely, of seeking external financing.
In the long term: the long-term financing strategy consists of rationalizing production costs in order to improve the financial performance of the company. In other words, the objective is to succeed in financing the activity thanks to the only receipts, while avoiding as much as possible to resort to external financing.
What are the different types of financing possible?
The financing needs will not be the same for a company which takes over an existing business as for a company which launches an innovative project. Therefore, it is important to find the method best suited to financing business projects.
Among the major financing strategies, it is possible to cite:
Self-financing : this is a financing method that allows the company to find its financial balance thanks to its own capital, that is to say thanks only to cash contributions and current account contributions made by the associates. This ideal financing method, however, is often difficult to achieve in practice.
Business subsidies : when setting up or taking over a business, many aids can be made available to the entrepreneur. Among them, it is possible to cite business subsidies which are public aid available to entrepreneurs under certain conditions.
The professional loan : it is an external financingby which a banking or financial establishment places an amount at the disposal of the company. However, this method of financing has a cost for the company since it is required to repay the loan, as well as to pay interest on the loan.
Crowdfunding (crowdfunding or crowdlending): There are two types of financing which the company uses public input to develop its project. In the first case, it is a donation with or without consideration. In the second case, it is a free or paid loan.
Fundraising : this method allows the company to increase its share capital thanks to the arrival of investors in the casocial center. However, to find investors it is necessary to have a truly convincing project.
How to implement your financial strategy?
In order to be able to set up the company’s financial strategy, it is necessary to have previously drawn up a cash flow forecast over one or more financial years.
The cash flow forecast is a document that allows the entrepreneur to assess his capacity to finance his activity and his development during a given financial year. By means of this document, the entrepreneur ensures that he will be able to meet his expenses. This also allows it to anticipate the financing strategy to be put in place in the event of periods of low activity.
It is on the basis of this document that the entrepreneur can consider his financial strategy in the short, medium and long term and that he can choose the type of financing most suited to his activity.