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Financial Planning Tips for SMBs Going Digital

12/08/2021

Importance of Financial Planning When Undergoing Digital Transformation

Digital transformation requires strategic planning and budgeting, which can effectively meet the scale and complexity of the initiatives involved. This financial planning should be accurate, achievable, and realistic. If your digital transformation investment fails to support your organizational requirements and strategic goals, it can cause the project to stall or get abandoned altogether. Thus, it is recommended for small and medium businesses (SMBs) that are planning to undergo digital transformation to work towards efficient financial planning to avoid meeting a similar fate.

Importance of Financial Planning When Undergoing Digital Transformation

Tips for Finalizing Your Digital Transformation Budget

Defining an appropriate budget for digital transformation is a difficult task that requires balancing of resources and needs. Here are a few tips for you to prepare a budget that can help you effectively meet your goals and maximize the impact of your initiatives.

Let Go of Traditional Budgeting Approaches and Integrate Innovation

The key driving force behind undertaking a digital transformation journey is to adapt with rapidly changing user behaviors fuelled by technological advancements. Thus, when you decide to digitize your business, a very important question worth answering is whether your financial planning is innovative enough to support new market trends. Though a significant number [1] of organizations have embraced more advanced ways of working when it comes to operational processes, their budgeting for digital transformation usually follows a more traditional path. This prevents the implementation of transformation from succeeding. Thus, in order to deliver the greatest possible value with your digital transformation initiative, it is important to focus beyond fixed costs. You can try out different digital personal financial planning tools to remodel your financial management. These tools can also provide you data-backed insights and help you optimize your budget planning by using machine learning and advanced analytics [2].

Ensure All Supplementary Demands are Covered

Meeting the various requirements of your business functions can often create the need to accommodate new monetary demands. You should not overlook these additional areas in your digital transformation budget. You can do so by understanding your business activities and your needs well. Do not merely be guided by your intuition, rather make informed decisions. To enable this, you would need to have relevant data that can help you predict expenditures. An easy solution would be to follow the changes that would be introduced in your infrastructure as a part of the transformation and finalize their costs alongside. For example, if the digital transformation initiative requires you to meet new security and compliance standards then ensure that your budget includes the expenditure that would be made for its effective implementation. You can go about other operational activities in a similar way and find out the necessary changes to be rolled out. Based on these requirements, draft your budget. Ideally, it is better to not rely solely on one financial support system. You should be ready with reliable backups to ensure that all supplementary demands are covered.

Explain to Your Employees the Need for Digital Transformation

Digital transformation can be a new concept for your employees and this can create confusion and chaos among them. Thus, defining your budget is going to be just one part of your battle. Another major requisite would be to create an awareness about the need for the transformation. Initially, it might appear that this understanding is clear among your employees. But, often it might not turn out to be so smooth. Budgets may get agreed in advance without clearly understanding the complexities and dependencies that the transformation might bring in. As a result, resources can turn out to be insufficient for meeting your demands in the long journey ahead. This gap in understanding can be filled in easily if you demonstrate your ideas in a highly visual and comprehensive way to your employees as well as stakeholders. Once a mutual vision is agreed upon, you can then easily go ahead with a more accurate budget at hand.

Involve Your Employees and Take Their Feedback

Balance between Conventions and Innovations

Conclusion

Digitizing your business is not a quick process and would require consistent efforts with a well-coordinated, long-term strategy. Having an appropriate budget at hand would help you to succeed easily and implement the needed changes seamlessly. Thus, it is always advisable to direct more efforts toward financial planning before you set out on your digital journey.

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