Let’s be frank for a moment.
You already know we are in unprecedented times – both socially and economically.
Your clients may have changed. Their problems most certainly have.
The question is, are you just reacting, or being proactive?
There are 6 key areas of forecasting that will give you certainty in over the coming months and beyond.
Forecasting is the art and science of proactively addressing the economic climate to model and predict your business’ response and results.
We already have some significant predictions from the marketplace. This advance warning can be turned in to proactive opportunity.
The 6 key areas of Business Forecasting are:
- RISK IDENTIFICATION – all businesses are at risk, here are a few key business risks to consider:
- Systematic Risks – probability of a business loss due to chance an entire market or economic will experience a downturn or even fail.
- Unsystematic Risk – is a risk that affects a specific company or line of business, the source of it might include strategic, management or investment decisions that a business faces daily.
- Financial Risk – not enough cash due to decrease in sales to pay creditors and fulfill other financial responsibilities. The more debt the higher the risk.
- OPPORTUNITY IDENTIFICATION
- Financial Opportunities – Evaluating historical revenue, profit margin of products / services, recent sales trend and cash flow.
- Sales Opportunities – spotting trends by analyzing where products are selling and what type of customers.
- Assets and Liabilities – what assets am I under-utilizing that could be put to work, and what liabilities / costs I can reduce to free up cash
- Relationships – Who can I leverage my relationship with more than ever – not just trade associations etc, but suppliers, affiliates and existing clients. Who am I asking for help and referrals, and how am (and when am) I asking?
- Market Data – What does my market look like? Who is, and who is not a target client? Searching the marketplace will help determine if it is being underserved or possibly saturated.
- CASHFLOW FORECASTING
- Plan and control cash flow and cash burn rate, breeding a sense of confidence about balancing spending with revenues
- We have a free Cash-Flow Template that can help here
- SALES FORECASTING
- Create a future revenue and timing model using current prospects and best, worst, and most likely scenarios.
- MARKETING
- Formulate new marketing strategies and tactics. The problems I’m solving for someone now may be different than before.
- How am I messaging this, and who needs me now more than ever?
- INVESTMENT & DEBT – Fulfill due diligence requirements for potential lenders or investors
- Who am I targeting, and when?
- How do I shape my business plan in a positive (realistic) light? Avoid panic and desperation.
- Is my bookkeeping accurate and up to date? (these three items below are mandatory to apply for a loan or seek investments)
- Balance Sheet
- Income Statement
- Business Plan
How do I get started?
Copy the above into a blank document, using the areas above as headings / guidance.
- Choose an initial timeframe to focus on (e.g. 90 days) to prioritize thoughts
- Start with bullet-point lists to trap initial ideas
- Collaborate, share and get help form those you trust to get ideas flowing. Include your accountant/bookkeeper, CPA and business advisors/mentors.
- Schedule time at regular intervals to work on this.
- When your energy is high, tackle the hard stuff. When you don’t feel like it, choose an easier area, but don’t procrastinate!
… and remember, great is often the enemy of good. To have something drives insights, even if it’s not pretty. This should be a living document.
Business Forecasting can either be done yourself, or with the help of qualified external organizations, such as Estmere. The most important thing is to approach this as an investment that could pay for itself many times over.
Regardless, what you will gain is further certainty and control of your business.
Help is at hand
If you want help to understand Business forecasting further (or get started yourself), we’re offering a free 30-minute one-on-one video call.
It costs nothing and may help greatly.
