Why Your Business Should Consider A Financial Forecast Service

We currently live in uncertain financial times.

It was a sunny day in June 2016 that the Great British public took to the polling stations to decide if the nation should remain in the European Union.

We now know that the result of that vote was to leave the EU.

In the days that followed the referendum, we saw the value of the pound plummet to a 31 year low.

And now, almost 2 years later the future is still very much uncertain for Britain, with almost daily battles between the Prime Minister and the House of Lords.

In truth, none of us really know what is going to happen when the UK finally divorce the EU.

This has created a genuine sense of fear in the business world with many global businesses talking about leaving the UK and relocating their businesses to the EU.

But what does all this mean for you?

In all honesty probably very little.

Brexit will affect some businesses but not all.

However, while all the media focus is on Brexit, many businesses face an uncertain future without any involvement with Europe.

This is, of course, from the natural pressures that business owners face on a monthly basis.

From sales targets to tax, staffing requirements, company debts, business loans, outstanding invoices and marketing budgets.

The modern business owner spins many plates and hopes that none of them crashes.

And crash many of them do.

In fact, according to data after five years just four in ten small businesses will still be trading.

But what if there was a way to see which plates were going to crash before it happened?

What if you could see what financial issues your business could face and be able to plan for these, ensuring that your business remains stable and agile in the coming years?

Well, fortunately, there is such a service, and in this article, we are going to explain why you should consider investing in a financial forecast for your business.

Ready?

Let’s do this.

What Is A Business Financial Forecast?

When you hire an accountancy firm to handle your end of year accounts, they report on the actual facts of your business.

It is past tense.

What you earned and what you spent and of course what tax you must pay.

But this doesn’t help you to grow and of course, survive.

This is where a business financial forecast comes in.

A business financial forecast is a roadmap that is prepared by an accountant to show you what the future looks like.

It will take into account things such as your business plan, your past performance, potential economic issues (such as Brexit), anticipated market changes, staffing issues, production cost variances and much more.

Think of it as a ‘business sat nav’, helping you to navigate the journey of your business and avoid the routes that will end you up in ‘traffic jams’, causing your business to slow down or grind to a halt.

A financial forecast is not a one time service, it is an ongoing process that keeps you on the best route for your journey, helping your business to adapt to current events and situations you face.

In the end, you have a plan that tells you what your financial accounts could look like and what you need to do to get there.

You Want To Grow Your Business But Have You Considered How?

Almost every business seeks growth, but few actually sit down to look at how they are going to grow.

So let’s assume you are three years into trading as a business and you plan to double your size in the next 36 months.

How are you going to do this?

You might assign a marketing budget to support this growth, but what happens if you do double your size?

You will need more staff, can they fit into your current premises?

You will need more equipment, more desks and computers and of course somewhere for them to go to when they have breaks.

What about holiday pay? Managing the sickness records and the human resource implications?

What about your pension contributions? Have you set aside money for this?

All of a sudden your desire to grow is not as simple as it seems.

And this is where a business financial forecast comes in.

Based on the current levels of profit you can start to plan for that growth, it might mean that you need a certain amount of capital before you can actually double your business.

You might need to fund the expansion of your premises first before you can handle the extra work.

You might need to save for the extra equipment that your new staff will have to use.

Your financial forecast might encourage you to take less dividend from the company and reinvest profits instead if growth is your goal.

Of course, it is difficult to say for sure without seeing a business, but a good financial forecast will help you plan for growth, not in some whimsical motivational speech type of way, but a solid financial plan for that growth.

But what about the bad times, can a financial forecast help you with those?

A Financial Forecast Helps You To Plan For The Storms (And The Rainy Days)

We started this article by talking about the current uncertain times faced by business owners due to Brexit.

But a business financial forecast is not just for those worried about the impact of Brexit.

It helps all business owners face an oncoming storm (or maybe just a rainy day or two).

Let’s take a very real example.

You are an e-commerce business that sells garden furniture directly through your website.

You have been in business for some time, and for a while now you notice that during summer your sales soar (for obvious reasons) but during winter no one is buying.

But one thing has a massive effect on your business, the good old British Summer. If the summer is great, then your sales rise like the thermometer on a hot day.

And if it is a washout your business is ‘washed out’, forcing you to lay off staff and slash prices to get rid of stock.

While a business financial forecasting service cannot predict the weather, it can help you to prepare for the bad summers through financial modelling.

By helping you to budget for the worst summers, you can start to look at your business expenditure and make efficiency savings all year round.

It can look at what financial reserves you need to have so you can survive in a lousy summer, what you need to be putting away each month so that you have these funds at your disposal.

And this is of course just one example.

All business types have ups and downs, issues they face and yes some of these can be planned for.

A skilled accountant will help you to make the necessary financial changes today by forecasting these for you.

Conclusion

A business financial forecast makes sense, and hopefully, you will have read this article and started to think about your business future and what it looks like.

Of course, it is easy to imagine a bright future and rarely does that imagination venture into the side of pessimism.

But a financial forecast does this for you.

Instead of using guesswork we can help you to take the necessary steps today with your finances that support the future longevity of your business.

A forecast will help you to plan for tomorrow, realistically adapting your business to bring stability and support growth.

If you plan on being in business for the next five years, then a business financial forecast can help you achieve that.

Get in touch to learn how we can help your business to forecast its future.