The Components of Financial Strategy

by George N. Root III; Updated September 26, 2017

A corporate financial strategy takes many different elements into account. As you assemble the components of a financial strategy, you begin to create a plan of action for your product release, business expansion or new marketing program. A company's financial information is the indicator investors use to determine how well a company is operating. When you use a solid financial strategy, you increase the financial health of your business.

Start-Up Costs

A new business venture, even those started by existing companies, has start-up costs. An existing manufacturer looking to release a new line of product has costs that may include new fabricating equipment, new packaging and a marketing plan. Do not make the mistake of assuming you can use existing resources to bring your plan to life. Include your start-up costs in your financial strategy.

Competitive Analysis

Your competition affects how you make money and how you spend money. It affects how you make money because of the market share the competition has that you do not. It affects how you spend money in your pursuit of getting more of that market share for yourself. The products and marketing activities of your competition should be included in your financial strategy. An analysis of how the competition will affect revenue needs to be included in your planning.

Ongoing Costs

Once your plan is in place, it is important to understand what your ongoing costs will be. These include labor, materials, equipment maintenance, shipping and facilities costs, such as lease and utilities. Break down your ongoing cost projections into monthly numbers to include as part of your financial strategy. It will make it easier to compare your ongoing costs to your incoming revenue to determine profit.

Revenue

The purpose of a financial strategy is to create revenue. But in order to create an effective financial strategy, you need to forecast revenue over the length of the project. A comprehensive revenue forecast is necessary when determining how much will be available to pay your ongoing costs, and how much will remain as profit.

About the Author

George N. Root III began writing professionally in 1985. His publishing credits include a weekly column in the "Lockport Union Sun and Journal" along with the "Spectrum," the "Niagara Falls Gazette," "Tonawanda News," "Watertown Daily News" and the "Buffalo News." Root has a Bachelor of Arts in English from the State University of New York, Buffalo.