Can you really forecast the future of your business?
Forecasting is a fascinating thing and many small business owners think it’s impossible. When I speak to some business owners they say it is hard because the cost of borrowing is increasing, banks aren’t lending as much, things are going bad in Europe, customers are not buying as much and I’m sure you could think of many other typical conversation topics.
The most fascinating aspect about forecasting is that it affects almost every part of our lives already. What’s the weather going to be like, how much is my super going to be worth, what about the value of my home. If the largest Australian public companies just kept doing what they are doing there are forecasts for economic growth, inflation and most other financial indicators.
The hardest part of forecasting is that you are setting yourself and your business some goals and targets and the higher the goal the more you have to stretch yourself and your team to achieve them. If you are stretching yourself beyond last years achievements you might start depending on your staff more, need to make a better commitment to your customers, package your products better or provide better customer service.
Every business is really a little cash-flow generating machine and if you plan to grow your machine you’ve got to know that your little machine can handle a heavier workload and higher speed while maintaining smooth operation. So set yourself a target and fine tune the money making engine to achieve it smoothly because everybody who has a stake in your engine wants to know what they can expect to see in the future. And, if the future looks bright and you can demonstrate why, then you might have others wanting to invest in it.