Review your Forecasts to Re-energise Your Business
3rd July 2020
Forecasting for 2020/21 now is crucial for re-energising your business post COVID.
You’ll need to revisit your budget, sales forecasts and cash flow to ensure you have a rock-solid plan to help you move forward again.
Here are some things to consider…
Revisit and adjust your budget
As I mentioned in my blog ‘Re-Energise Your Business’, we’ve seen some of our clients in technology, comms and software development businesses experience an unexpected boost during the COVID lockdown (aka the ‘Zoom’ effect). But that hasn’t been the case for all! For many this period has taken a big bite out of their financial reserves.
Now is the time to revisit your budget and make a new plan. Some things to consider are...
- What can you expect from your sales now, and what does this mean for your profitability?
- Have you had to defer on any payments during this time, such as a mortgage on a property, rent on offices and so on?
- Did you take out a government loan that needs to be paid back? If so, what's your plan for servicing these new loans?
- How do these new repayments impact your cash flow?
Adjust your sales forecasts
One thing’s for sure, you can’t use last year as your basis for your sales forecast because everything has changed!
- Have you found new markets?
- Has your market shrunk?
- Are there new products that you developed to survive during this time that now have potential to be rolled out? A great example of this is Milk and More. They were so overwhelmed in the first few weeks of lockdown that they created a neat little ‘waiting room’ page on their website – it was really cool; did you see it? Someone developed that and may now be able to sell it as a regular plug-in for busy websites or for helping manage peak times.
- Be pessimistic with your forecast and make a conservative sales goal, then see what you need to sell to break even this year. Once you have that figure add a percentage on top to make a stretch goal.
What does this mean to your cash flow?
Once you’ve finished revisiting and adjusting your new budget and sales forecasts, it’s time to look at what this means for your all-important cash flow. This is vital, especially if you’ve deferred tax payments or taken out one of the loans that were made available during this time.
I can’t stress enough how important it is that you don't lose sight of the bills that are going to start rolling in ‘later’. For example, the VAT bill you defer in June still needs to be paid and will come back to haunt you in March 2021!
Knowing everything that needs to be paid in the short and long-term is crucial! You can’t afford to make any mistakes with this. It could really cost you in the long run, and you don’t need that when you’ve just got your business back on its feet again!
Remember, you don’t have to go it alone! Enlist the support of experts to help you put your plans together, so you’re looking ahead with certainty and addressing the actions you need to take now. Our team at Grant Jones are here to help, so contact us now and we’ll arrange a time to talk through your plans.
Here at Grant-Jones we have been busy during lockdown and have launched a new client portal for all our clients. Through the portal your accounting and tax documents can be securely uploaded, stored, and electronically signed. Plus, clients who purchase our business growth services also get a cloud-based KPI Dashboard to help them drive their businesses forward.