What’s in the Forecast?
When we set out on a fishing trip or hike we check the forecast to see what we can expect. It’s no different in business. The forecast tells us if there’s some bad weather (poor cashflow) in store based on the direction we are heading (our plan). Just as you wouldn’t go fishing or on a long hike without checking the forecast, you shouldn’t run your business without an annual forecast.
Your forecast will tell you the following sorts of things:
- Do 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 running as efficiently as it could?
- Can savings be made in costs or should you invest more to get a better return?
- How much money do you need to set aside for tax?
- How much money can you draw out of the business each month without running short?
- Are you going to meet all of the requirements from the bank and how much debt can you pay off this year?
The difference between business and weather forecasting is that, when the business forecast is showing bad weather, you can do something about it to make the sun come out. The forecast tells you what’s going well and what’s not going so well so you can make adjustments before the year starts. You will understand your business so much better this way.
So don’t hunker down with your raincoat on ready to get soaked – take control and talk to us about getting your forecast done so it’s sunblock you start worrying about.
If you need help with your forecast from a group of Professional Chartered Accountants, please reach out to Ally –email@example.com – to organise a time.
‘Planning is bringing the future into the present so that you can do something about it now’ – Alan Lakein