Create a simple process to make forecasting and reviews easy
If we want our business to be more than a hobby, then forecasting and reviews are a simple way to step into our CEO role to become more strategic and grow our business.
Forecasting and reviews help us to make the most out of trends, quickly make corrections if new expenses or situations arise and help us to be in control of our business and money.
I know that many of you think that forecasting and reviews can’t co-exist with the feeling of ease. But here’s four simple steps that you can put in place so that you can stop ignoring the impact of your numbers and feel in control of where your business is heading.
1. Budget
Although we’d all like to think it, we don’t have a bottomless pit of money at our disposal. We have necessities and luxuries to purchase in both our personal and business life, so making sure that we put a cap on our expenses plus know exactly what income we need to make in order to cover these expenses will give us a greater sense of control.
When looking at budgeting, you should take into consideration what happened in your business last year and what you expect to happen in your business this year. But most importantly you need to consider yourself. What are your values, expectations, lifestyle desires and time? Forgetting to factor in what’s important to you will either leave you disillusioned or burned out.
2. Track
You can’t review what you don’t measure! Set up a simple spreadsheet with three columns for each month (or quarter if you prefer) of Budget/Forecast, Actual and Variance. Start small by tracking sales, cost of goods sold (if applicable), expenses and net profit.
As you become more comfortable and confident, expand your variables to include sales on a product or service level and add in some of the individual expenses.
The variance column will be your indicator of where to start your review process. The larger the variance, the more likely you’ll need to dig a little deeper.
3. Schedule time
It’s all well and good to set up your forecasting and review process, but you need to actually do it! The only way to ensure consistency with your process is to schedule time in your calendar to get it done. Set aside enough time to gather the data that you need (or download from your accounting software) and then to review it.
4. Forecast
Now you’re back to the beginning again! Where you’ve identified variances that will remain in place for the future, make sure that you update your Budget/Forecast column in your spreadsheet for the rest of the year. Some examples may include increases in supplier charges, increase in sale price, purchaser buying behaviour changes or new expenses such as outsourcing.
Forecasting and reviews can be easy, and they can be fun too! By taking small steps to control this part of your business, you’ll reduce overwhelm, grow your business and feel like the CEO you are destined to be. Numbers can be exciting, but above all they are empowering.
If you want to have a strategy for the year ahead that will help you achieve better financial balance and grow, I’m here for it! I go deep into your values and goals; review your current and map out your potential future strategies and their impact on your profit and time. That will be your plan for year ahead D O N E! Check out the Baseline to Blue Sky package here.