Forecasting, budgets and cash flows

A key element of any business planning is the preparation of profit forecasts, budgets and cash flows.

According to a Dun and Bradstreet report, the failure rate for new businesses is around 70% to 80% in the first year and only about half of those who survive the first year will remain in business the next five years. The most common reason for business to fail is poor cash management.

A pilot would never fly a plane from London to New York without a flight plan that explains how to get there. Yet all too often, businesses set off without clear plans, milestones or targets.

A budget doesn't have to be a restrictive plan that forces you to deprive yourself of what you want. In fact, a budget should be a guide, not a constraint. A reasonable budget allows you to do what you want. It allows you to use your resources where they're most needed, so your business will head in the right direction.

Business and financial plan

Creating a financial plan lets you control and plan your business's cash flow instead of it controlling you.

Creating a budget doesn't have to be a complicated or time-consuming task. Actually, in the beginning, it's best to keep things simple. The key is to determine how much you'll spend and earn in any given year, and then use that figure to project how you want to grow in subsequent years.

A properly defined set of such reports creates a set of financial targets which can be shared with the whole business. The effect of this we find is to really start to get the business working together to achieve these results. It gives the business a common purpose, allow employees to take ownership with a better understanding of the financial objectives.

Once again this process is a key element of and intrinsically linked with strategic planning, performance management and systemisation. It again demonstrates why our approach, taking a holistic view, is the only way to address true business improvement.

Developing a business and financial plan, budget and forecast

We have the expertise and extensive experience to help you develop such a set of budgets forecasts and cash flows that provide tangible meaning to your broad business objectives.

Our approach is to create a simple series of reports and backing schedules that will allow you to create and update future forecasts and budgets yourself.

Such a series of reports will put you in control and understand your businesses financial performance and in particular provide strong cash flow management tools.

This is not an over complicated meaningless set of documents, but practical reports that will quickly become a useable tool that guides and underpins sound financial decision making in the day to day, month to month and year to year successful management of your business.

What next

Our advice would be to take the next step and contact us and let's explore the possibilities.