“Hurricane a comin’, Stand Fast, Secure the Rigging!”…..
This is a line from Disney’s The Little Mermaid and I thought it summed up at least one side of Forecasting for your business.
When I was growing up I had one Disney movie on tape – It was “The Little Mermaid”. I’m 95% sure I know all the words from that film…. including songs.
So naturally it was going to make it’s way into my blogs at some point! Our toddler even tolerated 30 minutes of it a few weeks ago, and it was pure joy for me….
Yes! I have successfully converted the child to love Ariel, Flounder and Sebastian… my work here is done! 😊
On a more serious note though, as a Small Business Owner, cashflow is the key to success.
Forecasting is a way of looking ahead to see where you will be in the future.
The London School of Economics have said that the two biggest obstacles facing small businesses are:
- Poor financial processes.
- Lack of access to funding.
Whilst Albion Centures, a venture capital investment firm, says that only 1 in 5 SMEs believe cashflow is a major concern.
So there’s a difference between what business owners think are issues, versus what the actual concerns may be….
I’m a small business owner, what can I do??
Good Cashflow Management needs a few things (I go into this in more detail on the “Hold Back The River Blog Post), but if you missed it, in Summary;
- Processes – Do you have good Accounts Payable, Accounts Receivable, Stock Control & Bookkeeping in Place?
- Overheads – Review them regularly – quarterly is good. Cancel down any old subscriptions not in use. Do you have an Expense Budget that you can stick to?
- Profit – Is your Margin correct? Are your sales high enough to cover overheads?
But the main thing is ALWAYS LOOK FORWARD… or as Dory says “Just keep swimming” (Disney example again?!)
Why should I bother though?
Forecasting is Important. Period.
It will help you plan future decisions carefully (such as taking on a new team member, launching a new product, opening another office etc), but will also highlight any areas where you may struggle in the future and enable you to prepare for the potential issues.
If you forecast correctly, you will have a better idea of when to invest in new equipment, stock or services, rather than ploughing ahead as if blindfolded like Sandra Bullock in Birdbox… (okay, I’ll stop with the film analogies!).
With this information to hand, you can make decisions. For instance, shortening payment terms to get paid quicker, reviewing credit control, inventory and purchasing processes and potentially looking at your debt structure (is refinancing an option?)
If Forecasting sounds like a plan… and it should!!! give me a call and I’ll talk you through the options.
Lets ride this Hurricane into calmer waters and have a Lookout in that Bird’s Nest, keeping an eye out for Storms and Pirates…