If there is a list that small business owners in Canada should be paying close attention to, business survival rates should be put at the top. Determining the rate of business survival will give you an idea of how challenging it is to keep your business afloat these days. If you are among those entrepreneurs who are fretting over the current state of their business finances, here’s what you should do: come up with a financial forecast for your enterprise.
What is a financial forecast?
A financial forecast is basically a plan that will help you map out your business finances more strategically. A financial forecast is a tool that determines your projected income and expenses. For small businesses with simple finance and accounting operations, listing expected inflows and calculating them against their cash outflows already creates a better picture of their business financial position.
Why is a financial forecast important?
In the same way that you need a viable strategy to win any game, doing business also requires a similar scheme. You have to know what to expect financially so that you can anticipate problems in your cashflow even before they exist. Moreover, a financial forecast is also important in further asserting the financial strength and viability of your business. Without a good report from your most recent financial forecasts, it will be difficult to get loans from banks or to convince investors to put their money in your business.
How can you create a financial forecast?
There are three basic items to consider in creating a sound financial forecast. Here’s a basic rundown to help you understand the process more:
1. Problem definition
Identify your most serious business pitfalls and try to address them in your forecast. This will help you understand the extent of the problem and whether you have been responding to it well.
2. Cashflow forecast
Projecting your cashflow is one of the basics of putting up your own business and working out your own business finances. You simply need to calculate how much cash your business will get for a specific period
3. Profit determination
How much is your business earning? Keeping tabs on the actual figures will help you understand your business net worth. It will also be useful as you come up with new strategies for your business.
Financial forecasts are essential tools for your business. Without them, you might as well be driving around with no certain destination in mind. Of course, these forecasts could be a little tricky so seeking help from professionals would make things simpler for you.
If you’re on the lookout for financial forecasting services, you can get in touch with our professional advisers at D&V Philippines.