Updated: Feb 8
Why do I need a profit and cash forecast?
If you're trying to build your business better, and make confident decisions, you need to use a profit and cash forecast otherwise known as a financial forecast, or projected income statement. It's like a budget - but much more useful, and easy to maintain.
What is a profit and cash forecast?
A profit and cash forecast is similar to a budget but also takes into consideration things like:
your business model
the sales goals you want to achieve
real-world changes to your business every month
Forecasting profit and cash can and should be simple. It needs to include enough detail to help you plan correctly but not so much as to waste your valuable time.
With a thorough forecast, you'll be able to answer key business questions:
Am I making the right spending decisions?
Can I afford to bring on a new hire?
How many clients do I need to retain to stay afloat?
Which products or services should I spend more time supporting?
What happens if a strong competitor enters the market?
How do I forecast profit and cash for my business?
Looking ahead with profit and cash means you can prepare for different scenarios and outcomes. To do that, your forecast needs to be nimble, but realistic.
You could spend lots of valuable time budgeting for every possible lin
e item and business expense, but that level of granularity is really only helpful in retrospect.
With a profit and cash forecast, you'll consider your business from a 5000-foot view. This way you can see the pitfalls to avoid and opportunities to explore ahead of time.
To show you how simple but powerful it can be, we want you to use our FREE and simple forecast template.
If you're interested in having us manage your financial forecasting and reporting, book a call with us at Lookahead. We'd love to hear about your business!