The time and dedication it takes to stay on top of your current financial situation while also planning for the future can be a full-time job in itself. To be an effective financial expert, you should at least know these few strategic terms;
- Financial Analysis
Analysis of financial metrics such as return on investment and payback period.
Strategy planning often requires forecasts such as predictions of market demand.
- SWOT Analysis
An evaluation of current strengths, weaknesses, threats and opportunities.
- Goal setting
A goal is a desired outcome. Strategy is primarily driven by goals in the context of the opportunities and threats that exist in the market. It is common to define goals as a starting point of strategy planning.
- Management Accounting
A collection of accounting techniques that support management decision making and optimization.
- Market Analysis
An analysis of market conditions such as size, growth rates, demographics, influencers and trends. Important to industries such as technology and fashion that experience a high rate of market driven change.
In most cases, an organization develops far more strategies than it’s possible to execute due to constraints such as budget and time. As such, prioritization is a critical strategy planning step that decides what gets done. A strict ranking of priorities typically achieves more than a rating system.
- Financial Risk Identification
It is common for strategy planning to involve early phases of risk management such as risk identification with estimates of impact and probability.
- Strategic Drivers
Strategic drivers is a broad term for everything that influences a strategy including mission, vision, goals, values, principles, competition, regulations and markets. Listing out strategic drivers is a basic step in strategy formation.
- Structured Planning
The use of a process for strategic planning that might include information gathering, strategy formation, estimation, business cases, reviews, decision making points, budget approvals and goal setting.