The importance of planning and forecasting in your business

It’s easy to get caught up with the day-to-day running of your business, after all you need to take time to get new clients in, service the existing clients, as well as running all the admin and HR tasks.

But how often do you step back and take a look at the bigger picture? Do you know where you are going, how you are planning to get there, and what that means for your business? What are your goals? Do you want to sell, grow, acquire other businesses?

Do you find yourself in ‘head-down’ mode and working through your to-do list without a thought to whether you are running your business properly or efficiently? Does planning and forecasting take a back seat? By the time you’ve got through what you want to do that day, reassured yourself that all clients are happy and work is done, the last thing you want to do is sit down with loads of figures around you and spend more hours working on the business when you could be with the family. Am I right?

See, the thing is, this needs to change. You have your priorities all wrong. Taking the time to have a handle on your business means that you don’t necessarily need to spend all the other hours trying to get everything done! For example, if you don’t know how well your business is performing, what’s likely to happen a few months down the line, for all you know, you could be doing well enough that you could take on some help and give you some time off!

Forecasting and planning doesn’t necessarily mean doom and gloom, it’s a good thing to do. You will be able to prepare for unforeseen circumstances and have a back-up plan in place. Imagine being able to take that worry away from you? It’s important to ensure you are making the most of the resources available to you, therefore maximising all opportunities for revenue.

Here are some other reasons why planning and forecasting should be one of your top priorities:

  • Helps you to manage cash flow. This is one of the biggest reasons that small businesses fail, and you need to be able to evaluate money coming in and going out so that any potential shortfalls are highlighted well in advance so you are able to dip into reserves, secure an overdraft or loan, or just be able to have that conversation with suppliers that you need to pay. Forewarned is forearmed in this instance
  • What does a successful business mean to you? If you don’t know what that looks like, how will you know if you have got there? And how will you know if you are on track to get there? The nature of business is that inevitably there will be ups and downs, so you need to be on top of what’s going on so that the good times can make up for the bad times
  • Protect against the unexpected. For example, if your business deals in many different currencies, how do you plan for currency fluctuations, particularly in this unknown Brexit environment? Building in a contingency could be the wisest thing you do for your business
  • Assessing performance. Are you or your employees working to their full potential? Are you over-servicing clients, for example? Do you respond to those that shout the loudest, and therefore spending a disproportionate time compared to the income they bring in?
  • Evaluation. Planning is pointless without knowing whether you are on target, and what’s working and what isn’t. So evaluation is just as important as planning. Evaluating as you go along will help you make informed decisions about your business rather than ‘going on instinct’ because you think that it’s the right thing to do

So you can see how vital planning is, as it underpins your whole business. So now how much importance do you think you should place on it? If you struggle to set time aside, then consider planning it into your diary, the same time every week works well for some, say a Wednesday afternoon, then you know that’s your time to evaluate how your business is performing against your plans.

I can help you also to get systems and processes in place to help make your planning and evaluating easier, it should be a seamless process that becomes second nature. After all, Henry Ford sums it up quite nicely,

“Before everything else, getting ready is the secret of success”

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