Forecasting - Why it's important
Do you need help with budgets and forecasting?
A new financial year is upon us, and now is the perfect time to get your budgets and plans sorted for the year ahead. The last two years have been a real roller coaster for most business owners and the next year looks to be another mixed bag.
Here at REAL we are all about planning for the future. Forecasting is great tool to have in place - it can help with:
- Goal setting – setting some measurable goals and including those in your forecast enables you to track your progress through the year
- Planning on some big expenditure? Or looking at employing a new staff member? Expanding your business? Forecasting can give you clarity on how these big-ticket decisions will affect your cashflow and bottom line
- Seasonal cashflow issues? If you run a seasonal business, having clarity around where your cashflow crunch points are enables you to plan for those. Having a forecast in place comes in handy if you require an overdraft from your bank to get through those tight spots. Forecasts are also helpful for planning around the Dec/Jan period which for some businesses are tricky when production ceases or slows down, but wages and other bills continue.
- Tax planning – forecasts can help you work out how much you should be putting aside for tax
- ‘What if’ scenarios? What if you put your prices up 10%? What if you reduced your price 10%? What if you increased volume by 10%? What if your costs went up by 10%? Once we have a forecast in place we can use this as a basis for testing out different scenarios.
If you would like to have a forecast put in place or have a discussion on how a forecast could work for you, please reach out to us.