In today’s rapidly changing business environment, financial forecasting might seem like just another task on a CFO’s endless to-do list. However, at our Wichita-based accounting firm, we consistently see how crucial forecasting is for businesses of all sizes—especially for our small business clients across the Midwest.
Why forecasting matters more than ever
Imagine getting behind the wheel of your car, putting on a blindfold, and attempting to navigate to your destination. Sounds dangerous, right? Running a business without financial forecasting creates similar risks. You might be moving forward, but you have no idea what’s ahead, when to turn, or when to stop.
For small business owners juggling sales, customer service, and daily operations, forecasting provides the roadmap needed to make informed decisions about:
- Cash flow management
- Inventory planning
- Staffing requirements
- Investment opportunities
- Growth strategies
Real benefits we see our clients achieve
Our small business clients who implement regular forecasting practices consistently report better outcomes than those who operate purely on intuition or historical data alone. They experience:
- Better cash flow management: By projecting income and expenses, businesses can anticipate tight periods and plan accordingly, preventing the all-too-common cash crunch.
- More confident decision-making: When considering a new hire, equipment purchase, or expansion opportunity, having projected numbers removes much of the guesswork.
- Reduced stress levels: Knowing what’s likely coming provides peace of mind that many business owners find invaluable.
Simple forecasting approaches for busy business owners
Forecasting doesn’t need to be complex. We recommend these straightforward approaches:
- Rolling quarterly forecasts: Update projections monthly, looking 3-4 months ahead to maintain accuracy without overwhelming yourself.
- Scenario planning: Create best-case, likely-case, and worst-case projections to prepare for various possibilities.
- Focus on key drivers: Rather than forecasting every line item, concentrate on the 5-7 metrics that truly drive your business.
How to get started
Begin by reviewing your past 12 months of financial data. Identify patterns and seasonal fluctuations. Consider external factors that might impact your business in the coming months. Then draft simple projections for the next quarter.
Need help making forecasting a regular part of your financial management? Our team specializes in helping small businesses implement practical forecasting systems that provide clarity without consuming excessive time.
Remember, taking off the blindfold is the first step to navigating your business journey with confidence. With proper forecasting, you’ll not only see what’s ahead but also discover new opportunities along the way.
