Forecasting Your Next Year in BusinessEditor
Business forecasting is no easy task. Some even say it’s impossible. Unless you’re telepathic, there’s no sure fire way to accurately pin point exactly what is in the cards for the next year. While we always want to be looking to the future, the past does hold some valuable information to help you plan ahead. Looking back can tell us if and when we slow down or pick up in business. Of course, this isn’t an exact science and there are things that happen unexpectedly that are unpredictable. The key is taking all of those factors into consideration when forecasting the upcoming business year.
Needless to say, each business has different variables. For instance, how you project future business will vary if you have a retail business than a seasonal one like landscaping. Unanticipated factors, like natural disasters make it difficult to precisely gauge what the outlook will be for the new year. Weather patterns (particularly for those in seasonal businesses) can also make for fluctuations on your bottom line. Putting those matters aside, there are other components to keep in mind when anticipating what’s to come.
Obviously, if you have a retail business, you probably see your sales rise around particular times of the year. If you sell gift items, holidays like Christmas, Hanukkah, Valentine’s Day, and the likes, will bring in more business. These are times to plan on bringing in more inventory and possibly hiring additional help. This forecasting is more difficult for those that are only in their first couple of years of business. But for the rest of you, simply looking at past records to see if there’s been an increase each year, will help. Needless to say, this means you need to have those records readily available. Social media and increased viewership of your business by the public makes a difference in your sales as well. If you’ve noticed more online or store activity, you may want to allot for a possible increase from your usual intake.
In any forecasting, time is of the essence. Don’t wait until the last minute or you’re going to find yourself unprepared and playing catch up. This will stress you and your staff and could result in lost money. This is especially frustrating when a surge or dip in business could have been foreseen. Plan ahead as to when you will be updating your business plan.
Pay attention to what your customers are saying and doing. Don’t be afraid to get into conversations with people that frequent your business to get a feel for what’s happening on their end. If they, too, own a business, ask how it’s going. If their organization is slow, that may be a predictor of what’s to come for yours. Less profit on their part means less money for them to spend. They are likely doing their own forecasting and you may be part of their planning.
To take the last paragraph to another level, pay attention to the businesses around you. If local eateries or retailers that sell items not considered necessity, are slower than usual, it can be telling. What those observations reveal is that people may be strapping down on their own budgets. And if you have a business that tends to see a decline in times where people are spending less, plan accordingly. Now might not be the time to make renovations or additions to the company.
Consider the cost of goods and services you utilize. Have utilities seen a rise in your area? Is the price of gas higher or lower than last year? Are your work vehicles getting up there in years where they will require more maintenance or replacement? These type of circumstances should play a part in how you are going to budget your money for the upcoming year.
The bottom line is to plan for the worst but to expect the best. That statement isn’t meant to discourage you or to be pessimistic, but simply to be realistic. Imagine how pleased you’ll be when your results exceed all expectations. And, of course, should you find yourself planning for a surge and have a need for capital, give us a call. One of our business advisers here at Fast Capital will be happy to help: 800-735-6107.