If you could look into a crystal ball and see into the future, would you do it?
In life there would be many reasons for and against having a quick peek at what our future looks like … will we be happy? Are our loved ones ok? Do we end up ticking off all of those items on our bucket list? Some of us would jump at the opportunity and others of us would prefer to sit back and let it all unfold before our eyes.
While looking into the ‘crystal ball of life’ is not exactly possible just yet, looking into your businesses crystal ball definitely is! It is called financial forecasting and some of us would go so far as to say that if you get your businesses financial forecast right, then you also have the potential to influence the outcomes that your ‘crystal ball of life’ has planned for you.
Financial forecasting is critical to the survival and growth of most businesses. It is where you take the time to have a realistic look at your income, expenses, bank balances, goals and anticipated workloads. From there, you need to review how each of these items will affect you on a month to month basis, as well as annually. Your financial forecast will highlight any months where you will enjoy surplus cashflow as well as months where your cashflow will be at an all-time low (and no doubt your stress levels at an all-time high!).
Armed with this powerful knowledge you will then be able to identify the key influencers that drive your business. You will also be able to look objectively at how you will navigate through your future. Will you have to generate some new ideas to increase income that will take the stress out of those low cashflow months? Will you use some of the surplus cashflow during the good times and pay off some additional debt, so that you won’t need to worry about their repayments during the quieter months? Are you in a position to avoid the costs associated with late payments, lost discounted opportunities or negotiate better prices with your suppliers?
As you implement your new financial vision, it will be beneficial for you to monitor your progress each month. By conducting this monthly review, it will become very obvious how you are tracking. You will see quite clearly if you are achieving your profit objectives, goals and non-financial targets. If things are not quite progressing as desired, then it is simply a matter of adjusting the forecast and reassessing your solutions.
We find that our most successful Clients set clear targets each and every year and they monitor their results with us on a regular basis. They also respond quickly and effectively to any changes and they have control over their cashflow.
So take a peek into your businesses crystal ball today, because with the power to foresee the future, you have the power to influence the outcomes.