A great read from local business- Janine Roberts, Accounting Associate at Haven on “The Business Forecast: Sunny with a chance of of rain”.
Starting a business can be daunting for anyone, but when forward planning gets left in the wake of initial growth explosion and high aspirations, it can lead to bigger problems than anticipated.
Many new businesses find that they experience a high growth period within the first year or so of operation, and, without realising, many business owners become lulled into a false sense of security as they watch their dreams become reality.Unfortunately, these dreams can be dashed in an instant if there aren’t practical and manageable plans in place to mitigate risk and ensure long-term sustainability and growth, so it’s important for any intrepid businessman or -woman to create a cashflow forecast before they even celebrate the cutting of that red ribbon.
Creating a cashflow forecast doesn’t have to be disheartening, it just has to be practical and realistic. It may seem overwhelming to see in black and white where your outgoings lie in comparison to your profits, and there may not be much difference between the two – but this will give you a reasonable expectation of how things will pan out so you can see clearly when you need to raise funds and where you may need to cut back.
If you’re just starting out and don’t have as much experience within your industry as you’d like, you can take a look at existing industry benchmarks to align yourself with how the more successful businesses in your area are operating. If you are expanding or creating a new venture within your industry, you can always use your previous figures to get an idea of where you did well and where you can improve in future.
It’s also important to consider any seasonal variations in your forecasting – for example, if you have started a business selling sun protection products, you’ll need to factor in a slower trading period in the winter months when the desire for such products will undoubtedly dwindle.
Forecasting should take place frequently, no matter what situation you’re in. It’s important to know where you’re at at all times so that you can address any shortfalls before they become bigger issues, saving you an immense amount of stress and heartache later on.
Although forecasting can be tedious when you’re in the ‘honeymoon’ phase, it’s a vital part of ensuring your business can withstand any unexpected turbulence and is able to survive long-term.
They say the early bird catches the worm, so take a couple of hours out of your day to put a plan in place and get a clear idea of where your business is headed and where you’d like it to be in the future. Make a note of your current goals and include those in your forecasting – seeing a clear path towards them can give you that extra boost you need to keep pushing through when times get tough.
And if you’re not sure where to start, our advisers at Haven can help set you up with a plan and give you the tools you need to make your business or contact
Janine Roberts on 0800700699 or by email email@example.com
As an Accounting Associate at Haven, Janine is accustomed to working alongside an extensive number of clients, understanding and delivering customised reports specific to their industries and requirements, as well as in ensuring their tax compliance requirements are met. With her strong reconciliation and analytical skills, Janine provides valuable support to businesses in managing and monitoring results against forecasts and budgets.