6 Tips for a Better Business Forecast

In uncertain times, it gets harder and harder to predict financial results. Some business owners throw up their hands in disgust and wing it instead.

Bad idea! Instead, when budgeting gets harder, do it more often. And for a shorter time frame.

• Shorten the horizon. I am not suggesting you ignore a 12-month budget. But put more effort into a three-month budget.
• Budget cash flow as well as profits. Both are critical now.
• If money is very tight, use a rolling, 13 week cash flow. Update it weekly.

  
  

• Meet with your staff about it. If you are in a crunch, make sure everyone is aware and onboard.
• If you get a windfall, celebrate. But then take a good look at that 13-week cashflow again. Make sure you don't spend it when it really will be needed in about five weeks.
• Keep your business version of a bucket list. What are you deferring that needs to take priority when cash flow eases? Candidates for your business bucket list include equipment, rehiring staff and staff training. If you cut back on marketing (generally not my recommendation) be sure to add it back in as soon as possible.

  
  

  
  Budgeting is hard in the best of times. In tough times, which many small business owners are still in, it is hard and essential.

  
  

  
  Budget more often and with shorter horizons to help yourself, and everyone else, make the best decisions.