This article is intended for those who don’t require a full format business plan. In some cases, a client will only wish to have forecasting done. To describe this service, lets examine the cases when you would need forecasting, and also detail what it normally includes.
The financial forecasting normally consists of three main sections:
- Opening Balance Sheet
- Your Starting Budget
- A Financial Forecast
The financial forecast is one of the essential components of any business plan. It addresses important questions that allow to assess and predict the business’ future operation:
- What are the sales levels that you will need to achieve in order to break even?
- What is the monthly overhead that you will need to consider and factor in the budget?
- What is the yearly and monthly workforce and payroll expenses?
Typically, the financial forecasting can be produced for two year, three year or five year spans. It essentially depends on what you, the client, are looking for. The forecast will basically define and determine the financial goals of your operation, as well as some of the guidelines that you will need to follow in order to reach those goals.
One of the questions it will be able to answer is, for instance, how much does the business need to earn in sales in order to generate $100,000 of net profit at the end of a year? It puts your operation in very specific numeric frames and allows you to better plan the business’ operation.
What is the added value of using BPL Experts service for this?
Some customers ask us the very valid question of what is the difference between getting our experts to write the business forecast and using an online calculator or a spreadsheet template?
The main difference is that our forecasts are audited by an onboard certified financial advisor. Any forecast structured by BPL Experts is always reviewed and audited for being legal, precise and correct, with regards to taxation elements and other ratios that need to be taken into account when the forecast is put together.
Even before that, we use only the most precise numbers when we put them into our system to begin with, not settling for approximations or averages. We will double check your original statements and documents to use the most accurate data possible and ensure the most accurate forecast as a result.
In addition to those two factors, we also substantiate the forecast by extensive market research that ensures the numbers are going to still be valid and applicable in a few years. Another point of added value is that when you work with us, you always have someone to consult with. You can brainstorm and analyze with our experts, providing contingency plans for different scenarios in the future.
Essentially, that is the main purpose of the financial forecast. The main problem of any entrepreneur is unpredictable circumstances that produce unforeseen results. This is bad for business and can turn an otherwise feasible and lucrative investment into a failure.
A business forecast alleviates this problem of fear and uncertainty, allowing for a visible, foreseeable and attainable future.
What are the uses of such a forecast?
The financial forecast is usually incorporated in a business plan, comprising one of its sections. However, if we are only being asked putting a financial forecast together, without the rest of the plan, we will deliver it separately as an Excel Spreadsheet for one-year forecast and a Word Document for a multiple-year forecasting requirement.
We still recommend to have a full business plan composed to ensure your way to success, but if you are confident about planning your operations yourself, then getting a financial forecast is the bare and absolutely necessary minimum.