Your small business financial plan in 8 simple steps

Only 32% of Calgarians have a written financial plan — don’t leave your future to chance.

If you’re a small business owner, chances are you’ve poured your time, energy and savings into building your dream. But when it comes to planning for your financial future — both business and personal — it’s easy to push it to the bottom of the list. The thing is, without a solid plan, it’s hard to know if you’re truly on track.

Financial planning doesn’t have to be complicated. With a few simple steps, you can get clarity on your goals, confidence in your numbers and peace of mind knowing you’re building something sustainable. Whether you’re just starting out or have been running your business for years, these steps will help you take control of your finances and move toward the life you’ve envisioned.

Let’s walk through 8 simple steps to help you build a strong, realistic financial plan — so you’re not just working in your business, but for your future too.

TIP: If you work with a financial planner, there’s a lot of value in coordinating a meeting with your CPA and financial planner.

Step 1: Set the vision for your life and business

Before you build your financial plan, it’s important to understand what you’re working toward. What does success look like to you?

• Your 10-year snapshot: Go full pie-in-the-sky. What does a day in your dream life look like ten years from now? Paint a vivid picture.
• Your 3-year snapshot: What needs to happen in the next three years to feel on track toward that 10-year vision? What revenue and profit does your business need to hit?
• Your 1-year goals: Break it down further. What do you need to accomplish this year to be a third of the way to your 3-year snapshot?

Step 2: Break it down into 90-day priorities

Quarterly goals are easier to manage — and more effective — than big, vague annual plans. These 90-day “rocks” (also called SMART goals or OKRs) give you clear focus.

Ask yourself: If I could only accomplish three things this quarter that would move me closer to my dream life, what would they be?

Step 3: Build your budgets

Start with your household budget — then build your business budget to support it.

• Household budget: Export six months of personal banking and credit card transactions into a spreadsheet. Tally up fixed and variable expenses to find your monthly burn rate.
• Add big-ticket items: Consider savings goals like a house downpayment, renovations, RESP contributions or a future vacation.
• Determine how much to pay yourself: Use your household budget (plus savings) to calculate your target take-home pay. Decide whether that will be paid as salary or dividends.

Example: If your household needs $7,500 per month:

• Salary: You’ll need to pay yourself about $10,000/month ($120,000/year)
• Dividends: About $100,000/year, plus ~$11,000 in corporate taxes

Step 4: Can your business afford to pay you that amount?

Next, create a budget for your business:

• Start with last year’s monthly financials
• Apply growth projections for revenue and variable costs
• Factor in fixed costs — including your compensation

Will your business show a profit? If not, revisit:

• Your household budget
• Your business revenue projections
• Your savings or retirement goals

You might need to stretch your forecast across two or three years to make the numbers work.

Step 5: Finalize your business budget

Once the numbers line up, copy your budget into a “Target Forecast” sheet. Adjust the revenue and expenses to hit your goals — including your desired salary and profit margin.

If you’re using Xero, you can load your budget into the software and track how you’re doing month to month with Budget vs. Actual reports.

Step 6: Find your focus and make a plan

You’ve set your goals — now it’s time to turn them into a plan.

• Finalize your 1-year goals and 90-day priorities
• Break those goals into small, doable tasks
• Set aside time each week to work on your priorities

Each action brings you closer to your vision. Keep it simple and stay focused.

Step 7: Use tools that make life easier

Smart tools can save time and take the stress out of managing your finances:

• Xero: Cloud accounting software for everyday business tasks like invoicing, reconciliation and reporting
• Helm: Forecasts your future cash flow based on real-time data from Xero
• YNAB (You Need a Budget): Helps you plan and manage your personal budget
• Wealthsimple: An investing platform that helps you build a portfolio based on your goals and risk tolerance

Step 8: Reflect, revamp and repeat

At the end of each quarter:

• Review what worked — and what didn’t
• Celebrate your wins
• Adjust your priorities based on what you learned

Revisit your three- and 10-year snapshots annually. Set new one-year goals each year, and keep refining your 90-day priorities. With consistency, you’ll see real progress toward your dream life.

Free financial plan for True North clients

We’ve partnered with Nathan McAdam, an Investment Advisor at RBC Dominion Securities, to offer our clients a free, no-obligation written financial plan. This plan helps answer key questions like:

• What does my current financial situation look like?
• If I live to 90, will I have enough to maintain my lifestyle?
• If I passed away tomorrow, would my family be financially secure?
• How would market changes or inflation impact me?
• Can my business survive a major shift or crisis?

Let’s build your plan together

At True North, we help small business owners like you build a financial plan that works — and grow your business with confidence. Book a meeting with one of our CPAs to get started.

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