Five business and financial planning actions for small housing associations

Small housing associations face many challenges in business and financial planning, requiring tailored strategies to ensure long-term stability and growth. DTP Senior Consultant Andy Chapman sets out the five essential actions providers should consider.

1. Develop a comprehensive 30-year business plan

Creating a long-term business plan is crucial for small housing associations. A 30-year business plan provides a solid framework for financial stability and strategic growth. This plan should include:

• statement of comprehensive income: forecasting income and expenses over the long term
• statement of financial forecasting: detailing expected financial performance and cash flow
• statement of cash flow: ensuring liquidity and financial health
• unit data and compliance information: meeting regulatory requirements and benchmarking against peers

This extensive planning helps providers anticipate future challenges, align with funder expectations, and satisfy stakeholders, including tenants and investors.

2. Strengthen data collection and quality

Accurate and comprehensive data is the backbone of effective business planning. Small housing associations often struggle with data collection, especially in relation to stock condition. To address this, providers should:

• improve stock condition data: regularly update and maintain detailed records of property conditions, ensuring they comply with all regulatory requirements
• enhance income and cost data: track rents, service charges and other income sources alongside budgeted and actual costs
• utilise technology: adopt software tools like HousingBrixx for efficient data management and long-term financial planning

High-quality data enables more accurate forecasting, better risk management and informed decision-making.

3. Conduct regular stress testing and risk management

Identifying and mitigating risks is essential for maintaining financial health and a crucial regulatory requirement. Providers should:

• perform stress tests: simulate various adverse scenarios to understand their impact on the organisation’s finances
• maintain a detailed risk register: document potential risks and regularly update it to reflect new challenges and the organisational appetite to different risk areas
• develop mitigation strategies: create plans to address identified risks, ensuring resilience against potential financial shocks

This proactive approach helps providers prepare for uncertainties and maintain stability.

4. Look forward, not just backward

While historical financial performance is important, forward-looking planning is crucial for future success. Providers should:

• focus on future challenges: consider issues like zero carbon targets and EPCC ratings in long-term plans
• incorporate economic assumptions: use economic forecasts and trends to inform financial planning
• set long-term goals: establish objectives that align with future regulatory requirements and market conditions
• consider the financial implications of meeting the new consumer regulatory framework (providers in England)

By looking ahead, associations can better navigate upcoming challenges and opportunities.

5. Leverage expert support and bespoke solutions

Working with experienced financial consultants can provide significant advantages. DTP can offer:

• specialised financial planning tools: utilising software like HousingBrixx for detailed and reliable financial modelling
• tailored support: customising services to meet the specific needs of each association, from data collection to strategic planning
• ongoing relationship building: developing long-term partnerships to provide consistent support and advice

Expert guidance ensures that providers are well-equipped to handle their unique challenges and achieve sustainable growth.

Small housing associations must adopt comprehensive and forward-thinking business and financial planning strategies to ensure their long-term success. By developing robust long-term plans, improving data quality, managing risks, focusing on future challenges and leveraging expert support, these organisations can achieve financial stability and meet the needs of their stakeholders effectively.

Get in touch with Andy directly if you would like to discuss how DTP could help – a.chapman@dtp.uk.com –  and also find out more by listening to our recent podcast on the subject – https://www.youtube.com/watch?v=vkX16gdlYJ4&t=2s