What happens when you go to the grocery store without a plan? You end up buying a bunch of food that you don’t actually need. It is more of the same with starting a business. Making a business plan is the best way to create a business that is forward-focused and financially stable, especially in the startup phase.
Here are some reasons for forecasting your financials when you are making a business plan:
When you start to make a business plan, you must create clearly defined goals. Your goals must especially include financial goals. When there is a clear goal, you and others will know exactly what you are working towards, which will help you to make sound strategic decisions later on.
When the company’s accounting information is in front of you, it makes it a lot easier for you to get an overall picture of your company’s financial health. Forecasting can give you an idea of what your company may earn and spend in the near future. This information can help you look for ways to cut costs and earn more revenue.
For best results, we recommend working with a professional accounting service, like ourselves, to pinpoint these cost-cutting areas. We are able to prepare monthly and quarterly sales forecasts for your company. This will take the pressure off of you to decipher the numbers and discover problem areas.
If you are planning on raising money from an investor or bank, they will expect a detailed financial plan with realistic projections. When you include financial projections in the process of making a business plan, they can understand how your business will stand out from the competition and make money.
Forecasting can help you monitor your company’s growth over time. When you are first making a business plan, it is important to anticipate changes and other possible factors. If you expect an influx of business during a certain time of the year, you should note that. Over the years you might notice that that “boom” grows bigger each year.
Taxes are an important and often overlooked part of making a business plan. Forecasting state and federal taxes can help you predict what your company will owe when the time comes. After looking at the projected sales volume, your financial accountants can calculate how much the company owes the government. Tax professionals can also use the information to make tax recommendations.
We strongly believe that it is never too early to start thinking about your financials when making a business plan. Predicting what they will look like over the next month, quarter, year, and beyond are key to reaching your goals and having a stable business.
Please contact us today for more information regarding making a business plan. We’d be happy to chat with you to find out how we can help your business grow, and keep growing. At MOD Ventures, our highly skilled strategic business advisors understand how to improve your company’s bottom line.
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