Business planning and forecasting
Talk to your franchisor about sales forecast and ask store owners in the franchise about their sales figures. They should be updated throughout the year, just like a budget-to-actual analysis.
Even though you don't have the cash in hand, you can count those invoices as assets.
Consider the following assumptions: Are facility expansions or capital equipment expenditures required? Be sure to incorporate any marketing plans into your cost structure. New product lines coming on line Old product lines going away Pricing strategy Key account strategy…accounts you are targeting for growth and those you may walk away from.
What inventory levels will be necessary for the plan, are they different than previous years? A carefully thought-out financial forecast can help guide many of the decisions you make, from hiring new employees to managing your inventory.
Try to settle these prior to finalizing your budget.
Plan vs forecast
While both processes orient financial activity toward the future, a financial plan is a road-map drafted now that can be followed over time and a financial forecast is a projection or estimate of future outcomes predicted today. The benefit of a business plan is to get everyone on the same page as to where the company is going. It is fine to assume no change for the sake of planning, but state that is the case. You will need to find out how sales are calculated for your industry. Financial Forecasts Financial forecasting is critical for business success. Make sure your budget is also a rolling document. Use current year actuals as a base, then justify increases or decreases each month, taking into account any explanation for dips and peaks that occurred in the current year. As mentioned before, financial forecasting is as much art as science. Talk to your franchisor about sales forecast and ask store owners in the franchise about their sales figures. Your timing should line up with profit adjustments. They should be updated throughout the year, just like a budget-to-actual analysis. Both businesses and individuals can make use of financial plans and financial forecasts.
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