Looking to the future
When you hear the word ‘Forecast’ do your eyes glaze over and you stop listening?
Don’t worry it’s a common reaction. HOWEVER! Forecasting does play a very important part when growing your business.
Today, I want you to look past the word and look at what it really means. Look at how you can start ‘forecasting’ in your business with ease!
It will be a good idea to go back and checkout my VLOG on Cash Management – there are some overlaps in both processes.
As a recap – Cash management is very much about making sure you have enough money to meet your commitments in the short to medium term, showing you where and when you might have money holes that you need to address!
Whereas Forecasting is about growth and fulfilling the goals you want to achieve in the future.
Forecasting is important, when done right, it will take some of the anxiety out of dealing with the unknown and allow you to plan for the growth and the direction you want to take your business. Check out my blog ‘Give your Goals some Soul!
Forecasting is about thinking and planning how you want your future to look. It will include looking at your monthly sales and expenses from your cash management process. However, it goes further. It adds in your growth!
Forecasting is where you put numbers to your goals. You may already have done this at the start of the year, if you are like most entrepreneurs, you (probably) haven’t looked at them since. So now is the time to take them out again and look to where you want to go in the next 3 month.
I like to look at 3 month blocks as I find them easier to visualise and manage. Your forecast will typically be for 12 months. Once one quarter has finished you should add on the next quarter to the end of your forecast. Thereby always working 10-12 months ahead.
You may find it helpful to look back at the last year, or however long you have, and see your selling trends… which customers are still with you, are any on a monthly retainer or repeated monthly orders? Do you see these figures increasing or decreasing?
Through your Cash Management you already know what you are spending on a month by month basis, now looking at the increase in sales, what additional spend will you need to achieve those sales?
When looking at increasing your sales – you want the numbers to be both inspirational and realistic – which can be hard to get your head around at first. The more you look at this, back and forth, the more you will understand what is working in your company and what is not – and your forecasting will get easier.
Remember, if you do not visualise and plan for growth – growth will not happen – so be a little bit optimistic with the figures!
The more you look and update your forecast, the more benefit you will get from your forecast.
Remember, there is no judgement, what we are looking for here is to build your understanding of your business.
I’d love if you shared this article with your business friends or anyone you think may be interested.