Strengthening your Business Plan with financial forecasts

Strengthening your Business Plan with Financial Forecasts

A business plan is a roadmap that charts the direction of a business. It is not complete if it is not translated into financial terms - the dollars and cents.

The preparation of a financial forecast is integral in the business planning process.  It helps you, the business owner, assess funding requirements and understand the key drivers to cash flow and profitability. You will need to plan ahead to ensure that your business will have sufficient cash to meet its obligations and is able to weather setbacks.

Your financiers need to be convinced of funding your business. Besides understanding your business, they will want to know how much sales your business is capable of generating, what it takes for you to deliver the growth plan and profits. More capital expenditure and working capital may be required to fund your business growth. These are important factors that your financiers look at in assessing your business viability and creditability.

A healthy business is one that has growth prospects, makes good profits, and generates positive cash flows. This is crucial to remunerating and retaining your good people, as well as maintaining happy shareholders, financiers and creditors.