Forecasting
This is an important part of business planning. Having set out in the business plan what your business is all about and how you are going to go about it then the next stage is to produce some forecasts.
Forecasting can be a lot of guesswork as projections relate to expected future events and the actual results will almost inevitably differ from the projections. However - it does makes sense for you to plan ahead.
This is where we can help. We have experienced staff who are able to put together profit and loss and cashflow forecasts in a form recognised by other financial institutions. The information we produce will be based on the information you provide from the ‘homework’ you have undertaken.
The profit and loss forecast will help calculate what sales you need to cover all you costs (including what you need to cover your domestic expenses) and break even. We can include a sensitivity analysis which is a ‘what if scenario’ - "what will happen if I only achieve 80% of my sales- will I be able to cover my costs," can I afford to meet my normal living expenses? , or what will happen if I achieve 120% of my predicted sales? – will I have to take on additional help?"
The cash flow forecast will show what funding, if any, will be required to run the business, based on the figures you forecast. It will take into account any capital you have injected into the business at the outset and the arrangements you have made with your creditors and debtors regarding the money you owe and the monies owed to you respectively.
As with the profit and loss forecast, we can carry out a sensitivity analysis to establish what working capital would be needed if, for instance, sales exceeded expectations. The cash flow will enable you to establish if you will need short term assistance from you bank to cover your bills prior to monies being received from your debtors.
Finally, preparing forecasts will enable you to track your performance against your projections. Doing so will enable you to make important management decisions relating to your business. Start planning now...
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Contact Richard Smith
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Contact Graham Richmond