Andrew James, of James, Stanley & Co. has written a blog to teach you how to develop a successful business plan to ensure success and the steps that every business owner needs to take to give them the best chance of success.
It is a proven fact that business who engage in cash flow forecasting and sales forecasting improve their financial performance. Why? Well, having this financial information to hand improves decision making and decreases uncertainty. It means that businesses know where to invest, how to allocate resources and what preparations they need to make for each stage of their journey. You see historical data such as your previous year’s accounts can have some use but the benefits that this information gives, is far outweighed by the preparation of forecasts and scenarios.
Historically, forecasting has been a bit of a chore and not easy to compare with actual performance, but we now can all benefit from software that makes these tasks so much easier for even the smallest business. We use LivePlan with many of our clients and they certainly reap the benefits of comparing actual results with forecasts on a regular basis and adjusting their actions accordingly.
When you prepare a forecast, you effectively carry out a financial health check, looking into your business’ finances in detail and enabling you to trim or boost wherever necessary.
Once you have considered all your outgoings and revenue streams; what your staff position is, what assets and liabilities you have, then you can start forecasting and, as a result, you will start to make decisions not on hunches, but on facts.
You need to manage your financial data and don’t let it manage you!
We find that many small businesses do not allocate sufficient time or resources to taking care of their finances. It is common to leave work in this area to the end of a month or when the VAT return is due and by not getting the balance right business owners suffer continuously.
Historically, we have used spreadsheets but this method is not scalable when your business grows and you end up spending more time than is necessary in updating your spreadsheets to the detriment of profitability.
Cloud solutions such as QuickBooks, Xero and LivePlan now mean that business owners can access their data in real-time which is a game changer. So instead of looking at historical data we are able to look at current information and this helps is make better decisions and plan for the future of our businesses.
Finally, and most importantly, ever business needs to invest in its bookkeeping as if the information records is inaccurate or not up to date then no software can provide accurate and meaningful information in these circumstances.
If you would like to explore these ideas further, then please get in touch and we can demonstrate the benefits of cloud financial information and forecasting.
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