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Sin number 3 - Not having financial forecasts

By Greg Carroll 

 

 

This forms a critical part of your business. At a minimum you should prepare a one year budget forecast and an accompanying cash flow projection, broken down to monthly figures.

 

You've probably heard the saying "If you aim at nothing you'll hit it every time". This is absolutely true for business. Having a budget forecast paints a clearer picture of the revenue results your business needs to achieve each month and the anticipated costs involved in achieving those results. Once you formulate a budget projection you can then create a monthly cash flow that will indicate how much working capital (cash) you need to keep your doors open from month to month.

 

Like your focus, having a budget in place puts another check in your business system to determine when and if money should be spent. If you created your budget in a spreadsheet system, then you can quickly see how changes in your expenditure can affect your profitability and your cash flow.

 

For example while you might be presented with an excellent opportunity to promote your business through an advertising proposal, running the scenario through your budget and cash flow might indicate a cash flow short fall as you may have to pay for the advertising costs before you bank the anticipated sales.

 

As your business travels through your forecast period you should continually review and revise your forecasts to account for any significant changes in either your revenue or expenditure. Doing so will give you a more accurate reflection of your businesses cash requirement.

 

Are you on top of your cash flow?

Are you currently in business or planning to start a business in the near future?  Do you have cash flow concerns or want to find ways to improve your cashflow? Are there things you should or could be doing to improve your cash flow now?

 

To find out simply complete our Cashflow Review Form or complete the form below for an initial interview.

This course is not a substitute for independent professional advice. We do not warrant the accuracy, completeness or adequacy of the information or material in this course. All information is subject to change without notice. We and each party providing material displayed in this course disclaim liability to all persons or organizations in relation to any action(s) taken on the basis of currency or accuracy of the information or material, or any loss or damage suffered in connection with that information or material.