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This is an important part of business planning. After deciding what your business is all about and how your going to do it in your business plan, the next stage is to produce some forecasts.

Forecasting contains a lot of assumptions as projections related to expected future events and the actual results will almost inevitably differ from the projects. However, it is important to plan ahead.

We have experienced staff who are able to create profit and loss and cash flow forecasts in a form recognised by financial institutions. The information we produce will be based on the information you provide from the work you have undertaken.

The profit and loss forecasts will help calculate what sales you need to cover all your costs (including what you need to cover your domestic expenses) and break even. We can include a sensitivity analysis which aims to offer solutions to potentials risks and is a ‘what is scenario’. For instance, what will happen if I only achieve 80% of my sales? Will I be able to cover my costs and can I afford to meet my normal living expenses? Or what will happen if I achieve 120% of my prediction sales? Will I have to take on additional help?

The cash flow forecast will show what funding, if any, will be required to run the business, based on the figures you forecast. It will take into account any capital you have injected into the business at the outset and the arrangements you have made with your creditors and debtors regarding the money you owe and the money owed to you respectively.

As with the profit and loss forecast, we can carry out a sensitivity analysis to establish what working capital would be needed if, for instance, sales exceeded expectations. The cash flow will allow you to understand if you will need short term assistance from your bank to cover your bills prior to money being received from your debtors.

Preparing forecasts will enable you to track your performance against your projections and doing so will allow you to make important management decisions relating to your business.

Contact: Glen Wood –  Phil Nicholson

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