Five Reasons Financial Forecasting is Important For Small Business Owners
in Cash Flow & Forecasting on April 30, 2019Share with your friends or professional network
Why is financial forecasting important to business decisions?
Financial forecasting is the only way to set goals, make plans, measure progress and ultimately, save your sanity as a small business owner.
Steve has been the creative director at a marketing agency for nine years. In 2018, he decided it was time to go out on his own. With the relationships he’d built over the years, he really felt like he could make it work. So he took a leap of faith. That leap turned out pretty well in year one. He billed about $120,000, mostly through referrals.
However, when January of 2019 rolled around, things got a little scary. He had several projects up in the air, some of them larger than he could handle alone. Depending on how the cards fell, he was either not going to have enough work, or he was going to be so buried, he’d need to hire people. Steve wasn’t sleeping well. The uncertainty was driving him bonkers. He started to wonder, “Did I make a mistake? Was I kidding myself that I could run a business?”
Does any of this sound familiar to YOU?
You started your small business because you’re really good at what you do, just as lots of other small business owners have done. Chefs become restaurant owners. Managers become consultants. Graphic designers decide they’ll freelance full-time. But just because you’re skilled at your trade doesn’t mean you have every aspect of running a business nailed. This is a whole new talk show. You need to understand how the pieces of your business’ puzzle fit together.
Solve the puzzle of your business with financial forecasting. It will help you:
- Chart your course. Unless you’ve set measurable goals for your business, how will you know when you’re succeeding? Financial forecasting for your business helps you determine what’s feasible in terms of growth and scalability for your business and what you need to do to get there.
- Team up. Staffing can be tricky, especially when your business is new or in a growth spurt. How will you handle staffing needs? Add to your payroll? Outsource? Beg your friends to help you? Taking the time to do a bit of forecasting will help you understand when, where and how you can add to your team to get the support you need.
- Keep your mind on your money. Cash flow is a big concern for every business owner. Regardless of what your P&L is telling you, minding the actual dollars and cents in your checking account is key. Using a financial forecasting tool will help you get a handle on when those dollars should be showing up in your account and when they’re earmarked to roll back out again.
- Expect the unexpected. Plan for the best, but prepare for the worst. That’s wise advice indeed. You need to consider how the weather, or the economy, or a technological advance by your competitors might affect your business, and have a Plan B (and a Plan C!) in your back pocket.
- Keep calm and carry on. Some days, it might feel like your business is running you. Don’t beat yourself up. Every business owner feels that way at some point. The best way to bring order to the chaos is to have as much information at your fingertips as you can get. The more you know, the less you worry.
Steve chose FuelGauge.
Our friend Steve is learning that creativity is great when it comes to running a marketing agency, but maybe not so great for running a business. He needs solid numbers and a tool to get them quickly (and in an easily digestible format). FuelGauge is the perfect tool for small business owners to get a handle on their businesses and whip all those variables into shape to get a clear window into the future. It’s an affordable, web-based business planning solution that’s tailor-made for small business owners.
With FuelGauge, you can:
- Have 24/7, online access to your project capacity planning and sales.
- Set financial goals and measure your progress.
- Change a project’s status with drag-and-drop simplicity.
- Get insights into hiring needs and view the overall status of your current and future projects.
- Coordinate your financial forecasting and chart the future of your business.
Put the power of the ‘Gauge to work for your business today with a 45-day FREE trial. Get the tools you need to get a handle on your business, a picture of the future and a big ol’ chunk of peace of mind. You have nothing to lose and your sanity to gain.