{"id":4788,"date":"2022-02-07T10:11:59","date_gmt":"2022-02-07T10:11:59","guid":{"rendered":"https:\/\/www.langricks.com\/?p=4788"},"modified":"2022-02-07T10:15:32","modified_gmt":"2022-02-07T10:15:32","slug":"why-business-forecasting-matters","status":"publish","type":"post","link":"https:\/\/dev.withcreative.co.uk\/langricks\/why-business-forecasting-matters\/","title":{"rendered":"Why business forecasting matters"},"content":{"rendered":"<p><strong>Nobody has a crystal ball, so what is the point of trying to predict the future performance of a business?<\/strong><\/p>\n<p>A good financial forecast is an important tool to help you manage and grow your business.\u00a0 It will only be of use if you have a method of tracking actual performance against forecast in order to understand the key variances and dedicate the time to reviewing variances and actioning change in business behaviours.\u00a0 Such a forecast will:<\/p>\n<ul>\n<li>Help set realistic targets for a sales team to manage driving the business forward<\/li>\n<li>Help you understand when you will need to recruit and increase your workforce<\/li>\n<li>Help you to understand the capability in your current infrastructure and when you will need to acquire additional premises \/ machinery \/ facilities<\/li>\n<li>Help you identify cost saving opportunities<\/li>\n<li>Help you to make sure you are on top of your working capital cycle and the working capital requirement as your business grows<\/li>\n<li>Allow you to \u201csensitise or flex\u201d your assumptions \u2013 for example, what would happen if we increase the volume of sales, but with a price reduction?<\/li>\n<\/ul>\n<p><strong>Whilst we believe that a forecast is a useful tool in every business, there are specific occasions where they are particularly useful:<\/strong><\/p>\n<ul>\n<li><strong>When raising finance<\/strong> \u2013 a funder will want to understand the current and future cash flow of the business and to make sure that any new debt is affordable<\/li>\n<li><strong>When setting up a new business<\/strong> \u2013 running out of cash is one of the biggest failings of new businesses \u2013 having a realistic plan from the outset will help you better understand the working capital requirement of your business<\/li>\n<li><strong>Business exits<\/strong> \u2013 an investor will want to understand the future plans for the business and will want to understand management\u2019s ability to budget in assessing whether the projections presented are credible<\/li>\n<\/ul>\n<p>A robust forecast will home in on the key performance drivers of the business, understanding historical performance to help with sensible assumptions.\u00a0 A poor financial model will look at finger in the air percentage increase and decreases which is of little use to potential buyers or investors.<\/p>\n<p>We have a wealth of experience in <a href=\"https:\/\/www.langricks.com\/strategic-services\/financial-modelling\/\">financial modelling<\/a> <a href=\"https:\/\/www.langricks.com\/contact\/\">contact us<\/a> if you would like to understand our approach in more detail.\u00a0 Every model that we build is bespoke to the needs of the business.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Nobody has a crystal ball, so what is the point of trying to predict the future performance of a business? A good financial forecast is an important tool to help you manage and grow your business.\u00a0 It will only be of use if you have a method of tracking actual performance against forecast in order [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":1350,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[1],"tags":[],"class_list":["post-4788","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog-articles"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.0 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Why business forecasting matters - Langricks Chartered Accountants and Business Advisers<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/dev.withcreative.co.uk\/langricks\/why-business-forecasting-matters\/\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Why business forecasting matters - Langricks Chartered Accountants and Business Advisers\" \/>\n<meta property=\"og:description\" content=\"Nobody has a crystal ball, so what is the point of trying to predict the future performance of a business? 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