Managing your business finances and having the ability to forecast future revenues can be a pain for many entrepreneurs but it is an absolute necessity.
During this week’s Breakfast Club session, we invited Dana Azzi, CFA and founder of the House of Rebels to share some simple tips on how’s and why’s of business forecasting and the reason it can make or break your business.
You can catch the full presentation here. Below are some of questions asked during our post Q&A session.
If I’m just starting my business, how do I look at prior results if I don’t have any prior results to look at? If you don’t have any prior results, you can do some market research. There are always going to be similar businesses to yours even if they’re not exactly the same. Try to research as much as you can to get an idea of the market, their services, pricing. Start with those numbers to help with your future projections. Remember, these projections provide a guideline and need to be reviewed in intervals.
How often should we review this forecast? In the early stages, you’ll need to monitor your numbers more often. Every six months is a good place to start and that way you can make adjustments if needed.
I did my numbers and I know if I have five clients a month I’ll be okay to live, but who’s to say I’ll have five clients every month? That’s why it’s important to do a best and worst case scenario when it comes to your projections. Your best case scenario may be ten clients and your worst case is one client. Plan this into your forecasting because you won’t achieve your business target every month. You need to plan for your worst case scenarios.
My revenue fluctuates, I can’t figure out how to predict my revenue. All businesses have fluctuating revenue – you are not alone – and this is why forecasting the best and worst case scenarios are so important. We don’t like doing it but we need to otherwise our businesses won’t survive too many of those worst case scenarios.
Dana Azzi can be found on IG or you can visit the House of Rebels website.