LESSON 22: Use forecasts as your business radar, to pie Articles

LESSON 22: Use forecasts as your business radar, to pierce the fog of the future

 Forecasts are extremely valuable tools, and play a crucial part in controlling your cash. As we mentioned earlier, they are generated using your business planning model. Forecasts act as your financial radar. They enable you to look ahead. When used in conjunction with a budget they give you great scope for managing your business and […]

22.1 The difference between a forecast and a budget

 A forecast looks the same as a plan or budget and the mechanics of putting a forecast together are the same as for a plan or budget. However a forecast is really quite different from a budget, principally because of the way it is used, and the data it contains. If you use them wisely […]

22.2 Forecasts are quicker and easier to produce than your budget

 An updated forecast should be prepared every month. This needn’t be a time-consuming exercise. It will take far less time than the initial planning, and unlike big-picture planning, or settling upon your budget, you can safely delegate forecast preparation to someone else. That someone else must of course have sufficient understanding of finance to be […]

22.3 Forecasts reveal dangers and opportunities before you reach them, so giving you time to decide how to act to achieve the best outcome

 Forecasts are particularly useful for revealing potential danger spots ahead. When you are able to see obstacles before you reach them, you can avoid them. Danger spots will most likely show up in your forecast as future losses or cash shortages. If you do not routinely use forecasts to look ahead you risk running into […]