Any business is properly defined as the holistic sum of its parts: products, services, employees, partners, owners, location, systems, vendors, etc. The variables may vary in complexity, yet there’s a universal structure within every business. Ultimately, generating profits from sales is the main goal, which is accomplished with effective business strategies. Let’s look at the effective role of forward thinking financial forecasting in the development of effective business strategies.
What is Forward Thinking Financial Forecasting?
We’ve all experienced how clearly we can see our mistakes in hindsight, right? If only we would have done this or that, is the general thought when looking at our past mistakes. Most of these mistakes were simply caused by our lack of knowledge or insight into a better way to proceed. This is where the old adage: “finding out the hard way”, comes from.
Effective financial forecasting is basically thinking ahead, in order to not make financial mistakes in the future or present. Developing effective business strategies, in order to build solid systems around a business’s finances, ensures growth and prosperity in the future – without the bad surprises.
Neglecting the Role of Financial Forecasting
Start-ups and SMBs have limited resources to run their businesses, which means many times the role of financial forecasting is neglected. The day-to-day business duties consume the majority of the staff’s time, and many times there’s no dedicated CFO.
The problem with this scenario is: all the hard work of today may be squandered tomorrow without proper financial forecasting. For instance: say there was a miscalculation of a business’s tax liability, which could have been avoided with proper filing under certain tax rules. If this business would’ve known federal tax requirements better, they could have reduced their tax liability by 20%.
The old adage of: “work smarter not harder”, is the goal with financial forecasting. Neglecting the role of financial forecasting puts a business in danger of learning the hard way. Being lazy isn’t the problem with most businesses that fail, rather it’s the challenges of coming against unforeseen financial problems.
Ask Google, or…
Asking and searching Google for answers doesn’t always help, yet it could lead you to someone who can. Wouldn’t it be nice to have a financial expert to call when a financial question for your business arises? Wouldn’t it be nice to consult with an expert who has the knowledge and experience to help your business effectively forecast its finances?
GMLCPA offers to be the dedicated virtual CFO for your business; answering financial questions and developing effective business strategies from financial forecasting. We offer businesses the ability to comprehensively hand over their financial duties with our cloud accounting service, or the ability to simply use one of our many services, such as: business consultation, tax preparation, outsourced accounting, tax strategies and compliance, and software and systems analysis.
Summary
Running a business day-to-day is time-consuming, so neglecting the role of financial forecasting is easy to do. Part of the problem is simply not having the inside knowledge of the financial industry, such as: taxes, insurance, compliance, payroll, and the software and systems facilitating these. The other part of the problem is simply not having the time to properly develop effective business strategies from financial forecasting.
The goal is to “work smarter not harder”, in order to take the steps now to ensure a solid financial future for your business. This may take some expertise and help, so consider delegating and partnering with the professional CPA services of GMLCPA. We can help your business gain a realistic vision for future financial growth and avoid any bad surprises. Please contact us today to learn more.
