Power of a Fiscal Policy

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A fiscal policy is vitally important to start-ups trying to direct cash, businesses wanting to grow, or organizations trying to allocate resources effectively. It helps to direct allocations so that cash flow doesn’t become a hindrance to your business.

 

  1. Cash Strategy

Being able to quickly and efficiently direct unexpected cash that comes into your business is perhaps the biggest benefit of having a fiscal policy. It could go to marketing, hiring a new person, buying more equipment, paying off debt, bolstering a war chest, or any number of other things.

 

  1. Spending Plan

Having a budget that is already thought through before the cash is in your account is another major benefit of having a fiscal policy. It should tell you what percentage of revenue certain marketing expenses should be.

 

  1. Tax, Payroll, Vendors

There are so many demands on your money. Taxes need to be paid. Its payroll time again. You’re almost 30 days late on paying a vendor. If you’ve stressed over any of these examples, then you need to create a fiscal policy.

 

  1. Debt Management

Debt doesn’t need to be part of your business. Paying it down too fast can be detrimental to your cashflow. If you or your business has debt, it’s important to have a debt management portion of your fiscal policy so you don’t allocate too much of your available cash towards debt.

 

  1. Industry Trends

If your competitors are allocating portions of their budget towards R&D and you’re spending money on advertising or marketing instead, wouldn’t you want to know that? We can help identify industry trends and help you with your fiscal policy.

 

  1. Accountability

Perhaps the most over looked portion of a fiscal policy is the accountability portion. Having a plan is great, but it’s important to compare actual results with your goals and adjust.

Written by

Matthew Wilhelmi is a Business Consultant at Individual Advantages, the parent company of YourBizDr.Com. Matthew is an entrepreneurial minded professional who works well with complicated business strategies and excels in developing and implementing operational processes to achieve business goals.

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