When you start a business, it is most worthwhile putting together a business plan. Banks require these and accountants thrive on them. However, before making a business plan it is worthwhile taking expert advice and a third party opinion to gain an insight into their views, their opinions and their prejudices on your business proposition.

When creating a plan, it’s important to consider possible risks, pitfalls and potential disasters. It is also important to have an escape route – planned and ready in the event that the worst should happen.

So how do you plan your finances for a catastrophe? Keep it simple – keep an element of your money in cash. Keep a tight rein on your budgets, your cash flow and be careful where you place your money.

Here are a few suggestions to consider when preparing your finances for a disaster:

Set sufficient funds aside:

Putting money away in case of an emergency or a major change in your financial situation can help. By setting aside a sum of money each month and implementing a budget system to fit your personal situation, you can easily prepare yourself for any type of disaster that comes your way.

Of course if you struggle to sufficiently budget independently, there are trusted advisors that are able help you efficiently.

Putting money aside is always a safe strategy

Outsource the risk:

In the event of a disaster, it is difficult not to become emotionally charged and as a result you may not make smart and objective decisions, or take control at all.

Some people may wish to outsource this worry and thus their risk to insurance companies, or perhaps employ a financial planning company to not only advise you through a difficult situation but to aid your financial dealings in every desired part of your life. Make sure you place the right amount of money in the right hands, at the right time.

Create a good business plan:

Before embarking on a financial strategy, it is important to plan. A written plan can provide the necessary structure to achieve a desired result, ensuring you are on course to meet your objectives. Making sure you incorporate a financial safety net, in case of a catastrophe, there are a number of basic steps in creating any good business plan.

• Set your objectives, your aims and your goals

It is important to be realistic and attainable. If you fall short you will still have gone further than you might without a plan or without a strategy. Act with integrity and professionalism and monitor and evaluate your financial situation regularly.

• Decide on your target market

Remember - you do not need to sell or provide your service to everyone. Be realistic when selecting your price and provide yourself with reasons behind your costs. Put simply, provide value for money. Would you pay such a price for this service?

Having a plan will help you order you business

• Set up your marketing strategy

Appear in the areas of business, and circles of people who will benefit from your services and skills. Find alliances, and build centres of influence; people who can help develop your business.

• Plan an escape route, in case your business plan does fall short

Outline the actions you need to take to fix the problem. If after several attempts the business continues to fail, you need to be able to recognise when your business sustainability is a lost cause. Know when to protect your finances – and when to cut and run. Other opportunities are always available, so it makes sense to be totally in control managing your expectations and your finances.

• Set aside sufficient money to prepare yourself for the unforeseen loss of funds or setback to your business

Stick to your plan. Monitor, evaluate and amend as required, once you have provided your written reasons for any changes. If the business declines, for whatever reason, speak to a colleague, to your accountant, Financial Adviser, or your Financial Planner.

You may even feel it’s helpful to listen to or read testimonials from your clients - it is amazing how they can motivate you back into action.

Remember that business and finances are for the long term. Build your plan around the business term of at least five years and develop your finances for the medium to long term. A successful business, like a plant, needs time to develop and thrive.

Know what your finances are, how much is needed each month, or each year and start with an end in sight, building it up in small parts, one at a time. Enjoy the business, and the business will succeed. Make a plan – build – develop and grow your successful business.

Ian is the author of Your Financial Future: How to Manage and Maximise your Money, published by Panoma Press.