While we don’t have a crystal ball to predict the future, we can certainly do our best to get an idea of how our business will perform in the coming years through a business forecast. So what is a business forecast and why do you need one?
What is a business forecast?
A business forecast helps you to identify how your business finances are tracking now and how they might be tracking in future. It takes into account your sales, cash flow, and budgets and creates a handy report that can predict how you’ll fare in the next year or two.
Why do I need one?
Particularly important for newer businesses who might start off strong, business forecasting ensures that they are able to stay that way and plan well for any downturns. Creating a business cashflow forecast doesn’t have to be disheartening, it just has to be practical and realistic to give you a reasonable expectation of how things will pan out. This is so you can see clearly when you might need to raise funds and where you may need to cut back.
To some businesses, it can be overwhelming to see in black and white that there might not be much difference between your outgoings and your profits, but to ensure your business is able to survive long-term, you need to face the facts and put a plan in place.
For example, it’s important to consider any seasonal variations in your forecasting – for example, if you have started a business selling sun protection products, you’ll need to factor in a slower trading period during the winter months when the demand for your products will undoubtedly dwindle.
How often should I conduct a business forecast?
You should work on a business forecast fairly regularly, no matter what situation you’re in. It’s important to know where you’re at at all times so that you can deal with any shortfalls before they become bigger issues, saving you an immense amount of stress later on.
Your goals should also be in alignment with your business forecast, so if your goals change, your forecast should too. More often than not, having a clear plan in place to reach your goals can give you that extra boost you need to keep pushing through when times get tough.
Putting a business forecast together can seem like a massive undertaking, but luckily our expert team is on hand to help!
If you’d like to sit down and have a chat with us about where to start, get in touch today!