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Strategic financial management involves managing a company’s finances with the intention to succeed. This essentially means that strategic financial planning is responsible for attaining a company’s long-term goals and objectives and maximizing shareholder value over time. Given Toronto’s diverse and innovative economic environment, strategic financial planning becomes an essential tool for local businesses to navigate and thrive in this competitive landscape.
Below, we’ll explain what’s involved in strategic financial planning.
The goal of strategic financial planning is to create profit for the business and ensure an acceptable return on investment (ROI). This is accomplished through business financial plans, setting up financial controls, and a financial decision-making process.
Before a company can undertake strategic financial planning, it needs to define its objective — including identifying and quantifying its available and potential resources — so a specific plan can be devised to use its finances and other capital resources. Toronto-based businesses can benefit from tailored advice by consulting resources such as the City of Toronto’s Economic Development and Culture Division, which provides insights into local economic strategies and development.
In addition, strategic management also involves understanding and properly controlling and allocating a company’s assets and liabilities. These include monitoring operational financing like expenditures, revenues, accounts receivable and payable, profitability, and cash flow.
Furthermore, strategic financial management involves continuous planning, evaluating, and adjusting to keep the company or organization focused and on track toward long-term goals.
In the planning phase of strategic financial management, you will want to define your objectives precisely. In the diverse Toronto market, businesses must adapt their strategic plans to reflect local demographic and economic data to stay competitive. Your company will also want to identify and quantify available and potential resources to create a specific financial business plan.
Some of the most common things involved with budgeting for strategic financial planning include:
Local Toronto initiatives, such as Invest Toronto, offer tools and resources that can assist businesses in achieving economic efficiency and optimizing their financial planning.
As you enter the third phase of strategic financial planning, you will want to identify, analyze, and mitigate uncertainty in any of your investment decisions. Consider Toronto’s fluctuating real estate market and provincial economic policies when evaluating potential financial exposures and capital investments. You will also want to work to evaluate the potential for financial exposure. This could include examining capital expenditures and workplace policies. You may also want to employ risk metrics such as degree of operating leverage calculations, standard deviation, and value-at-risk (VaR) strategies.
The last step for strategic financial management is establishing ongoing procedures for your organization. These include:
Utilizing Toronto-specific economic reports and performance metrics can help businesses refine their strategies and achieve better alignment with actual outcomes.
Whether you’re running a small or large business in Toronto, there’s more to it than just bookkeeping and paying bills. The team at Leonard Tam Professional Corporation can help you build solid foundations for your business by providing a 360-degree view of how to make your business more profitable, keep most of your money by lowering taxes, and plan for your financial future.
Ready to get started? Book a meeting today with our team of experts.
