When we set out on a fishing trip or hike, we always check the weather forecast. It’s no different in business. The forecast tells us if there’s bad weather (poor cashflow) in store based on the direction we’re heading.
Your forecast will help you make informed decisions on:
- Whether you have enough sales in the pipeline to give you the desired level of profit you want for the year.
- Are your margins appropriate?
- Do you need to review your pricing or production processes?
- Is your business is running as efficiently as it could be
- Where savings can be made
- Whether you should invest more to get a better return
- How much money you need to set aside for tax
- How much money you can draw out of the business each month without running short
- How much debt you’ll be able to pay off
- Whether or not you will be able to meet all of the bank’s requirements
The difference between a business forecast and a weather forecast is that, when the business forecast is showing bad weather, you can do something about it to make the sun come out. The forecast will tell you what’s going well and what’s not, so you can make adjustments to reduce the impact of bad weather.
Just as you wouldn’t go fishing without checking the forecast, you shouldn’t run your business without an annual forecast. So, don’t live in your raincoat, waiting to get soaked – take control and talk to us about getting your forecast done so you know what to expect.
“Planning is bringing the future into the present so that you can do something about it now.”
– Alan Lakein
Need help putting your business financial forecast together? Contact us today!
This article first appeared on our old website.