Business Forecasting and Planning – Plan Before You Take Action!
I have been in business for more than 35 years. I have advised on more than 100 start-ups and have followed closely hundreds more. Probably the biggest mistake I have seen made by individuals considering starting a business is the failure to have a properly prepared business plan and do detailed business forecasting prior to finalizing their decision to move forward on the business. I have written a dozen times, and advised clients hundreds of more times, some of the best business decisions I have seen business/ prospective owners make is to not take action. I personally have chosen not to move forward on multiple business opportunities after completing detailed financial forecasts and looking into industry KPI’s (Key Performance Indicators) and how the projections measure to the industry. Business forecasting is a critical element in any business start-up, business expansion and other business decisions.
It amazes me that people are willing to spend $!00,000 or more for a business start-up but will not take the time, or the expense of a professional (which I obviously recommend), to go through the process of developing a business plan and performing business forecasting models. We all can get caught up in the prospect of owning our own business, the excitement of being our own boss, and the promises of others that we are going to make big money. But wouldn’t you like all of these positives and the ability to sleep at night knowing that the numbers pan out and make sense. Unfortunately, in some cases the numbers won’t work out and you will need to move on to another opportunity/ dream and the decision to not act on the current business opportunity may be the most profitable decision you ever made.
Business forecasting and planning involves more than just income and expense forecasting. It includes capital acquisition costs, marketing plans, start-up expenses, labor projections, inventory management and many other factors. Accumulating the information can be as detailed or general as the prospective business owner chooses. After preparing the forecast, we can then measure the financial results to KPI’s. Also, the business plan can, and should consider the non financial KPI’s and how they measure up to others in the same industry.
There are a number of simple software tools available to business owners or prospective owners to assist them in developing their own business plans. Here are links to a few:
These programs are solid starting points and offer basic planning and forecasting tools. But, they are not as detailed and specific as we at Joseph F. Fragnoli, CPA, PC would prefer.
The plan is only as good as the information input into the software, the questions asked and factors considered in the data utilized, and the ability to interpret the results. That is why we recommend engaging a professional to prepare the business plan and forecasts. We at Joseph F. Fragnoli, CPA, PC in Nashville, TN (and satellite offices in Chino Hills, CA and the Philippines) offer such services and utilize some of the most sophisticated business forecasting and measuring software available. We have written dozens of formal business plans and performed hundreds of financial forecasts. These plans are appreciated by investors and lenders. They provide excellent targets for success and they enable our clients to make accurate and decisive business decisions. If you are interested in having a business plan or business forecast prepared for you, please feel free to reach out to us and we would love to discuss this service with you. There is no financial commitment to talk and consider your options.