10.03.2025
Economic uncertainties, fluctuating markets and unforeseen crises make it difficult for companies to make long-term plans. Financial planning is therefore essential to secure financial stability, both during turbulent times and as preparation for them. We have some tips especially for small companies.
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Products that can no longer be ordered due to supply chain issues, higher prices for energy, materials and salaries or quickly changing consumer behaviour: the economy can be just like a roller coaster. Unforeseen events and difficult market developments or conditions constantly force companies to confront new situations. In these uncertain times, prudent financial planning and control becomes more important than ever before. But how can small companies secure financial stability in the current situation? Building up cash reserves, regularly checking cost structure, scenario thinking and greater flexibility in calculations can all provide an important impetus.
Even in small companies, it can be particularly challenging to look after the financial future alongside the day-to-day running of the business. These companies also often don’t have their own in-house finance experts. Creating quotes, processing invoices (unless you rely on digital invoice mailing and receipt), invoicing VAT, etc. eats up a lot of time and energy. Amidst this, you still need to find time to look after your finances, even when things are getting hectic.
Financial planning provides transparency on income, outgoings and liquidity and helps your company control its financial future, avoid shortfalls and plan targeted investments. Furthermore, you can take appropriate countermeasures in good time by running through various scenarios and assessing how they will impact on important financial key figures such as liquidity, revenue or profit.
In uncertain times, flexibility is key. Don’t set your financial plans in stone. It’s very important to regularly check and adapt your financial plan.
Voluntary cash reserves are a fundamental pillar of financial security. They ensure companies can cover their fixed costs for a certain time, even if revenue temporarily declines, unexpected expenses arise or incoming payments are delayed. Thanks to these reserves, companies are able to get through such situations with their own means.
How high these cash reserves should be varies from company to company and from one industry to another. Manufacturing companies have higher repeat costs for purchasing materials, energy use, storage and delivery, etc. and tend to have a higher liquidity requirement than a company such as a small service provider offering coaching advice. Companies with reserves can therefore minimize a range of risks. As a rule of thumb, it’s generally recommended to keep enough money on the side necessary to cover the company’s operating costs for three to six months.
A requirement for building cash reserves is a clean and forward-thinking liquidity plan, with which you can assess what income and outgoings you can expect in the next three to 12 months and what excess liquidity you can generate to act as reserves. The liquidity plan is a key element of the financial plan.
Worth reading: the article “How to secure your liquidity in the long term” in the Handelszeitung offers practical tips on the topic of liquidity and financial planning – and includes a simple Excel template for small companies.
PostFinance offers you ideal cash management tools, such as the Cash Management and Multibanking Tool (CMT). This gives you a quick overview of the liquidity of all your business accounts – i.e. accounts from PostFinance and third-party banks in Switzerland and abroad.
Sometimes, companies have unnecessary expenses that can threaten their financial stability. In order to remain financially stable in the long term, companies should regularly check their outgoings and only invest in necessary areas. A cost analysis can help identify unnecessary outgoings and recognize potential areas for savings.
Fixed costs refer to a company’s regular outgoings regardless of production volume, such as rent, salaries or insurance. Categorize these and check whether they are necessary or if you can reduce them − for example, by using a smaller office space or outsourcing tasks. Making a comparison with industry-standard costs can also identify areas for savings.
Variable costs depend directly on production quantities and include costs for materials, energy and transport. Analyse these costs by carefully checking your supplier contracts or production processes. You may find savings opportunities in volume discounts, process optimization or by switching to cheaper raw materials. Alternatively, check if you can migrate to new processes or technologies to save resources and lower costs in the long term.
Companies that do their homework on costs in quiet times can benefit in times of crisis. Regular cost controls help avoid unnecessary outgoings.
Run through different economic scenarios and analyse how they might affect your company. This can provide you with a clear picture of the risks you may face. It helps you recognize dangers early and make informed strategic decisions to secure your financial stability. Here is a suggested approach:
In the first step of the scenario process, recognize and define potential risks and unknowns that could have an effect on your business. These could be internal in nature: the cancellation of a production line or a shortfall in The link will open in a new window specialist staff. Alternatively, they could be external, owing to geopolitical developments, market fluctuations or pandemics.
Run through “what-if” scenarios with these relevant risks to test the different potential effects of a crisis. What if, for example, the prices for important raw materials double? What if an important customer can no longer make payments? Or what if supply chain disruptions lead to a drop in revenue of 25 percent? Or, to take the other extreme, what if a huge increase in customer demand uses up all available stock?
Simulate as best you can best- and worst-case scenarios for each relevant risk. An example of this is an unforeseen disruption in the supply chain due to geopolitical developments. These disturbances can increase costs and decrease profit, bringing companies into distress. What happens in the best-case scenario, the most likely scenario and the worst-case scenario? For each scenario, determine its likelihood of occurrence and the main threats.
Emergency plans should be developed based on the scenarios. This lets your company react promptly to any challenges should one of the scenarios occur.
If you are planning your next growth stages, investing in the digitization of your financial plans may be worth considering. There is a wide range of software that can easily model “what-if” scenarios and break them down into financial terms. These digital tools facilitate real-time analyses, automated prognoses and the integration of different financial data, making planning more efficient, precise and – above all – more flexible. This helps you adjust your operational processes, finances, budgets and plans to changing circumstances. Check online to find out which tool is best suited to your business.
Recommended reading: in the book “Financial Stability for your Company”, published in 2022 by budrich Inspirited, author Jürg Ross gives practical tips and shows with help of many examples how to reach the right decisions in day-to-day business so that your company becomes and remains financially stable.
Financial planning encompasses the wholesale analysis of all cash flows and processes within the company. Integral to effective financial planning are areas such as revenue forecasts, investment and capital needs analyses, as well as securing liquidity. Long-term and short-term financial planning is vital to guarantee financial security and to reach company goals.
Revenue planning: revenue planning represents the basis for the budgeted income statement and liquidity statement. It forecasts future sales volumes based on historical values. This ensures you retain an overview of which products are being sold to which customers and at what price.
Investment planning: the financing and economic viability of new investments for the future are assessed as part of investment planning. Firstly, information is compiled on the target investment and then evaluated by means of a critical analysis and performance audit. Is the investment really worthwhile? What financial resources are required? These questions must be answered when carrying out investment planning.
Capital requirements plan: the capital requirements plan determines when and how much investment has to be made in the company. It therefore quantifies how much money you need. A distinction is made here between long-term capital requirements, such as vehicles or machinery, and short-term ones, like materials and current expenses.
Liquidity planning: liquidity planning provides a comparison of all expected income and outgoings over a defined period of time (generally not longer than 12 months). It provides accurate information about when funds must be available to cover costs due. Such planning is vital to avoid precarious financial situations and to secure the company’s future.
Budgeted income statement: the budgeted income statement shows if and how much profit a company can achieve. In a first step, a sales plan is drawn up which shows the sales volumes that must be achieved for products and services over a defined period. The prices and variable costs are then linked to this. This indicates the gross profit. Fixed costs, such as salaries and interest, are deducted from the gross profit. The result is the company profit.
Budgeted balance sheet: the budgeted balance sheet shows how assets and liabilities will develop over a certain period of time – usually over a financial year. It is divided into assets (non-current assets, current assets, accruals and deferrals) and liabilities (equity, provisions, liabilities, accruals and deferrals).
Although business decisions often depend on current situations, financial planning is important to the company’s financial security. A long-term financial plan helps to achieve objectives set and to ensure the company’s future prosperity. It forms the basis for sustainable optimization. Short-term financial planning is vitally important to identify liquidity problems at an early stage and to take appropriate measures. Only when all six elements of financial planning are addressed will you obtain a full picture of your financial position. Only then can you find the right solutions for the challenges your business faces.
