There are some basic building blocks of financial planning that span the gap between business models and personal financial planning. They actually apply equally to small business and international corporations

What are some of the pillars of financial planning? The first is the plan. Although this might sound overly simple, it is surprising how many overlook its necessity and handle financial management by the seat of the pants method. In order to have a successful plan, there must be a clearly defined objective. The objective represents the vision of where the organization wishes to be in a certain period of time. It is said that is represents a vision rather than a goal. To say, the goal is to make a profit is too simple.

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The objective of the organization must be visionary and detailed in scope, but it also must be practical and attainable. Although financial managers may be involved in the process, the ultimate responsibility for the creation of the vision rests at a higher level. It is the goal of the financial manager to create the implementation part of the plan. This represents the second rule of financial planning. It is control.

Control is most often seen as a function of financial management, but it is a elemental part of the planning process as well. The systems that will allow control must be clearly defined in the implementation part of the plan. This includes the assignment of responsibilities and the delegation of power to designated managers. Control is tied to accounting and it must be strictly enforced. Business models have legal obligations to maintain accurate control and accounting procedures not merely as part of their responsibilities when they are a publicly held company, but for taxation purposes as well.

Another building block of sound financial planning is evaluation and measurement. It is common to establish what are known as milestones within the financial planning process. These might be called short term goals. They are used primarily to measure progress and suggest corrective action.

A final building block of all sound financial planning is risk management. The whole idea of the planning process is as much to reduce the risk of failure as to reach the visionary goal. The two concepts are closely tied together, of course, and if the journey toward the goal is seen as a gamble like a roll of the dice, financial planning is not really needed. The whole idea is to do everything possible to reduce the possibility of failure and so risk management is part of the financial planning process from the beginning.