Forecasting company performance for the next 12 months isn’t always easy – especially in uncertain economic times. With Australia’s unemployment rate hovering at around 6.4%, what can your company expect in the coming months?
What are the most reliable indicators of where your business will be this time next year?
- Look to the past. Indeed, past performance is not a reliable indicator of future performance. There are simply too many variables – from the economy to the loss of a key employee.
On the other hand, looking at last year’s numbers may point you in the right direction when planning new product roll-outs or taking on a new hire. The past may not be definitive, but the numbers are verifiable, performance is quantified, and changes that improve the bottom line can be defined.
- Plan for the worst and hope for the best. A fire in your office can put you out of business in 30 minutes if you don’t carry enough commercial insurance coverage.
Back up key data off-site in a secure location. Insure everything to recover quickly from an unforeseen disaster. If you plan for the worst, you’ll be ready for it. And, if the best-case scenario comes to pass, what a wonderful circumstance.
You can do more than hope for the best. You can plan for it by creating a variety of scenarios with different outcomes. For example, if you’re looking for more office space, and the attached building next door becomes available, do you have the financial resources to take advantage of this happy coincidence?
Plan for the best. Plan for the worst. Chances are, your company will fall somewhere between the best and the worst case so you’ll be prepared no matter what comes your way.
- Update company projections regularly. Circumstances change quickly in today’s Internet-driven business environment, and the forecast you prepared six months ago may not be viable today.
Forecasting business isn’t a once-a-year exercise. Update forecasts regularly. Weekly, monthly, quarterly. Each business is different so the frequency of developing performance projections will change according to everything from the seasons to special conferences, trade-shows, and other events.
- Maintain and update customer terms to avoid surprises. If your terms have always been “net 30” don’t surprise your client base with a new policy of “payment on delivery.” Your clients may not be prepared, and you may get a few angry calls from vendors and other stakeholders in your small business.
- Keep your sales team in the loop. These employees are on the phone and in the offices of your clients, whatever your business. Use the sales team to develop a sense of what it’s like “out there.”
Are clients cutting back? Expanding? Looking for more services or products? Your sales team is in direct contact with your client base and prospects. These men and women know the challenges clients face, and can provide input on how your company can help meet those challenges.
Don’t think of your sales force as simply a means to grow a business. The sales staff is on the front lines and knows what your clients and prospects want and expect from you
Consider the sales team an invaluable asset for collecting input from the field. These professionals will enable you to forecast business activity with real input – data that’ll help you forecast the future of your business.
- Be a presence. Attend trade shows. Attend conferences. Sign up for the local health fair or job fair. Submit articles to industry specific publications.
Get better known. Be a presence. Be an expert. Be an authority. It builds confidence in new contacts during initial engagements.
- Sweat the small stuff. A new hire can cost many thousands of dollars annually in salary, bonuses, and benefits, making it simple to determine whether hiring a new employee is a sound business move.
However, add up the small expenses: office supplies, petrol for remote site employees, telephones, computers, paper, copier toner – all of these fixed expenses are useful in developing a reliable forecast.
Don’t overlook small expenses. They add up to become big expenses – FAST
- Project income and outgoings. You may not be able to forecast income to the cent, but you do have a pretty good idea of operating costs. Factor in large projected purchases. Will your business open a new office across town? Will you require more lines of insurance coverage in the coming year?
Your business will most certainly change in the next 12 months. There may be incremental changes, or huge changes. Factor business plans into your forecasts.
Be realistic in compiling the numbers. Again, past performance is a fair indicator of future performance. Just don’t rely on past performance as the sole indicator of company forecasts.
Want more tips? Talk with your Insurance House business broker.
Things change in uncertain times.