Putting forecasting at the top of your business agenda has proven to help businesses succeed. In this blog, we’re going to give you just a handful of the many reasons prioritising forecasting is a critical process to get on board with.
1. Predict the future
Historical reporting is great for spotting past trends, but it’s far more beneficial to be looking ahead. The idea is you’re forging a path with a clear and insightful plan. This plan is made up of last year’s actual figures, with information pulled from your P&L. This will predict the performance of your business for up to ten years.
Say you’d like to expand to larger premises, and soon after that hire some more staff. Plugging your data into a forecast will show you where your cash position will be in coming months or years, therefore you can predict when the best time to strike out and invest in whatever it is you need.
2. Feel secure in your decision making
Because your forecast is generated from your actual data, you know you can trust it as a springboard for decision making. Your forecast will display any trends and patterns that crop up in your finances, so you can predict when a slow or busy month is approaching.
You’re able to be agile with seasonal or market trends. The best part of forecasting is it’s flexible, so there’s a lot of space to try out outcomes.
3. Learn from past mistakes
Your forecast will let you look back at previous data and see where you could have made better decisions. A great way to make sure you don’t repeat mistakes is to run scenarios through the scenario planner in Futrli. You can test out different variables and compare outcomes.
To make sure you improve in future, measure Key Performance Indicators (KPIs) to get a view of each department or metric to see how each part of your business is performing. It’ll help you identify problem or successful areas, so you can be proactive in running your company.
4. Save cash
Supply and demand are difficult to measure if you don’t have a forecast set up. And if you can’t supply, your customers will probably seek services or products elsewhere.
Knowing how much stock you’re holding in real-time and when busy spells are likely to occur is going to dramatically reduce customer disappointment. It’s great for inventory management: you’ll no longer be holding too much stock, nor short as your forecast can tell you when this level rises or falls.
5. Achieve sustainable growth
Comparing your earnings against your outgoings will help you identify the best time to invest in your business’ growth. Your forecast will be in real-time, and you can update variables to help you make decisions.
Also, Futrli alerts have recently been upgraded. In-app or email notifications will let you know if you’re ever close to limits or similar. Learn more about alerts, and how to leverage their power.
6. Get an edge on your competition
The chances are, your immediate competitors aren’t using the cloud yet – especially if you’re an SME. While the business around the corner from you might be offering similar products, they can’t identify any of the issues we’ve covered above.
Teaming up with a Management Accountant will also see you start thinking outside the box, and more about what’s around the corner. Helping you strategise to meet your goals – and helping you achieve them – is a surefire way of you creating a killer business strategy, which will almost certainly guide you to success.