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“But how do I know what’s going to happen?” is the constant cry from business owners asked to forecast their profits or turnover for the months ahead.
Many business owners are commercially astute and inherently entrepreneurial, and yet don’t like to spend much time juggling numbers, particularly those which involve an element of the unknown.
But to be successful, your business needs to get a grip on budgeting and forecasting. Being able to look forward is a mark of an excellent business leader and that includes being able to estimate future sales, costs and profits.
Technology has made it very easy for you to build and update budgets and forecasts. The spreadsheet is a hugely powerful number-cruncher which, if set up correctly, makes maintaining a budget very easy.
You can be spared having to build your own spreadsheet, as budgeting and forecasting templates can be found on a wide variety of business support web sites. Supplied alongside tutorials of how to use them, they make the process accessible to all but the most serious technophobes.
One of the many advantages of spreadsheets over paper is that you can have multiple versions of a forecast which take into account different scenarios and possibilities. Once you’ve discovered how simple it is to update forecasts, you may even find yourself spending too much time contemplating alternative outcomes, rather than focusing on running your business.
A budget is often prepared for the coming year and is a statement of the expected sales and costs of a business. It can also be used as a way of controlling expenditure, by limiting spending to the level agreed in the budget.
A forecast is usually prepared for a shorter period of time. While it’s also a statement of sales and costs, it is usually updated on a regular basis.
In reality, a budget and a forecast are very similar and a small business does not need to have both. What all businesses do need, however, is a separate forecast of cash flow from profit, because these are not the same.
Our team of commercial finance experts understands the importance of budgets, forecasts and cash flow to businesses of all sizes. This comes from helping hundreds of firms find the right solution to their cash flow problems.
If you want to talk with one of our Business Recovery specialists about your budget or forecast concerns, call us now on 0800 157 7355 for a free no-obligation consultation.