Come rain or shine – why forecasting should be at the heart of your business

Yes, it’s getting to that time of the year when you need to think about next year. Taking a look back on the 12 months that have just gone by, re-evaluating goals and objectives, and seeing where you are in relation to them. And then making a plan for 2018.
But it’s all very well making a plan, but how often can you honestly say you look at it throughout the year? I know that some of you will be revisiting your 2017 plan for the first time around about now (and yes, I do know that there are also some of you who won’t have a plan in the first place, but I’ll save that admonishment for another time…)
The key is not just to make a plan, but to use that as the basis for your whole business. To know what you are doing and when you need to do it by, like the back of your hand. And that’s where forecasting comes into play.
It’s so easy to be in ‘head down’ mode and when you finally look up – you’ve seen that perhaps a few clients have gone, and you probably need to do something about your business pipeline, as it’s looking a bit shaky. So you go into panic mode, and this is where bad decisions are made, where you go off track, and don’t stick to the plan.
Forecasting enables you to get a grip on your business, and as far as possible, prepare for any surprises. Imagine being able to take that worry away? OK, so you lose a few clients, but there’s a back-up plan, you know what to do, perhaps you’ve planned with a rainy day fund, or you’re in the process of setting up a couple of passive income streams that can keep you going if times are lean. It could even just be the fact that you’ve applied for, and been accepted for an overdraft, just to give you that buffer while you are waiting for that invoice to be paid. Forewarned is forearmed.
But how on earth do you go about it?
Take a look at your business plan. Where are you now compared to where you want to be? What’s the reason for any differences? Market changes? New competitors? Demand increased/decreased? Legislation? All of these will have had an effect on your business. Then think about the year ahead. What’s going to be coming into play that you know you need to take into consideration?
Use that intelligence to build it into your forecast – add in some flexibility. If there is any uncertainty in market conditions, that doesn’t mean your business shouldn’t move forward, it just means you need to plan for various scenarios. If you waited until you had complete certainty within a business, you would never grow or progress! So don’t let this hold back your plans for world domination.
My advice? Don’t plan too far in advance. Yes, it’s good to have a 5 or 10 year plan for you and your business, you want to know where you want to get to, but your forecast needs to look at 30, 60, 90, 120 days in advance. In detail. Things do change a lot in this time, so you need to have this on your desktop as a working document that is something you open at least once or twice a week. Factor some of your time in for this, so that you ensure that this is done. Otherwise it won’t.
Cash flow can really skew your figures and it’s one of the biggest downfalls when it comes to forecasting. Take that into consideration – if you know a client is a late payer, then factor that in. And keep on top of your payments – it’s better to get early payments than late – better in your bank account! Begin here, it may take some time to get right, but getting a routine in place is half the battle. Being in the know will give you control and the power to shape your business’ future. And that could make the difference between survival and not.
And of course, make sure you invest in a good accountant – who will absolutely insist you get these processes in place, if you do need help, then please get in touch, there’s no better time than the present.