Budgeting & Forecasting
Why is budgeting & forecasting so important to my business?
Annual budgeting and monthly forecasting provides your business with a clear understanding of its past and current performance which can help you to make informed business decisions and achieve external investment. Forecasting in particular will answer questions such as:
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Where is the business heading financially?
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What growth opportunities are there in my business?
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Do I need to review the structure of my business based on a robust forecast?
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Do I need to increase my overdraft or seek investment capital for future growth?
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Do I need to restructure the staff?
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What products or services are becoming unprofitable or less profitable and why?
BUDGETING & FORECASTING
Case Studies & Opinion Pieces
"If you don't know where you are going, any road will get you there." - Lewis Carroll
If you need to provide robust forecasting for one-off funding purposes or wish to use a forecasting model in an ongoing manner that incorporates your profit and loss, balance sheet and cash flow to have full understanding on where your business is going and its challenges, engaging a part-time CFO may assist evolve your business to the next level.
Robust budgeting and forecasting models and processes are important to provide you clarity as to how the business is performing and insights as to what actions can be pro-actively taken. When done properly, budgeting and forecasting keep management, executives and the board focussed on the future and the road to get you there.
Most organisations will have an annual budget for the next financial year. For many organisations this is nothing more than a profit and loss statement, however this needs to be integrated with the balance sheet and the cash flow forecast to provide a 3-way forecast that allows the business to understand how changes in one aspect of the business affect other elements of the business.
Whilst this is important, as it is the translation of the strategic plan or business plan into anticipated financial achievement, after a few months the budget frequently feels unrealistic, out of date and frequently starts gathering dust. There is increasingly a sense of financial blindness as to where the organisation is going. The forecasting process each month allows you to report and monitor on current and future activities and to incorporate the latest activities to provide clarity on where you are going and what it will take to get there.
The Problem
When you develop your business plan, budgeting and forecasting, you use the best information available, but you are unable to anticipate all the hurdles that could be raised or challenges such as key staff leaving, the cash used from implementing an acquisition, a lawsuit or even increased competitor activity. The budgeting process is thrown into disarray. It remains imperative that you understand where you are profitable, anticipated cash low points, can pro-actively put in place strategies to mitigate various risks that might arise and more generally keep driving the business onwards and upwards.
How CFO Evolve can help your business
Annual budgeting and monthly 3-way forecasting provides you a strong sense of where the organisation is going at all times throughout the year, where and when your cash flow low points are over the months ahead, potential funds you need to raise to ensure you remain liquid, anticipated profitability and significantly allows you to focus your team on the activities necessary to improve the situation. The ability to accurately forecast will also increase your chance of gaining investment and on better terms.
Why is budgeting & forecasting so important to my business?
Annual budgeting and monthly forecasting provides your business with a clear understanding of its past and current performance which can help you to make informed business decisions and achieve external investment. Forecasting in particular will answer questions such as:
-
Where is the business heading financially?
-
What opportunities are there for growth in my business?
-
Do I need to review the structure of my business based on a robust forecast?
-
Do I need to increase my overdraft or seek investment capital to cater for losses or future growth?
-
Do I need to increase or decrease the size of the team and if so where?
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What products or services are becoming unprofitable or less profitable and why?
If you are looking for CFO services and think that a part-time or virtual CFO could assist you and your business with budgeting & forecasting services please use the quick contact button below.
Additional CFO Services
Our highly strategic part-time and virtual CFOs have experience across a broad range of C-suite services. We can assist with your cash flow management through developing a strategic plan, an acquisition strategy or up-skilling your current financial team through CFO coaching and mentoring.
Below details some of our core services, but for a more in depth conversation about how we can help you, please contact us for a confidential conversation.
If you are looking for business growth in your business a dedicated part-time CFO could grow your business with a combined approach of strategy and financial insights across process improvement, business efficiencies and business growth through inorganic means such as acquisition or partnerships.
Cash flow is critical to your business' success and survival. If you don’t take care of your business' cash flow, you could end up not having enough to continue running the business.
A part-time CFO could guide you through a cash flow restriction to ensure your business remains cash flow positive.
If you are looking to maximise business profit, CFO Evolve could grow your business with process improvement, business efficiencies and focus on the areas of your business to maximise profits, turn wasted hours into productive ones, saving time, frustration and money.
Having a clear strategy, strategic plan or business plan are fundamental building blocks to achieve growth. Your business plan needs to expressly state where the business is going, the strategies to achieve those outcomes, who is accountable for the strategy and the timeframes and measures to ensure they are on-track.
At CFO Evolve; our part-time CFOs build your company a strategic plan or business plan that works.
There are risks associated with many parts of business. Anticipating a business risk and uncertainties before they occur and ensuring the mitigation strategies are incorporated in the strategic plan goes a long way to taking the fluctuations out of your business and ensuring you are on a steady growth curve.
If your business requires a business risk review, a part-time CFO can begin the process much quicker than if you hire an internal CFO.
Whether through debt or equity, a bank, venture capitalist or private equity, it is important to make your organisation ready as a solid business with a strong profit & loss and balance sheet and as an attractive investment to optimise the result.
Our part-time CFO services prepare your company through 3-way forecasting, business planning and process improvement to enable your business is prepared for funding, investment and capital raising.
CFOs typically enjoy to teach and they love to help build team, skill sets and overall, the business. CFO Evolve offer their highly experienced team of part-time CFOs for CFO coaching and mentoring purposes to financial teams that have incurred rapid growth, undergoing inorganic growth such as via a merger, acquisition or strategic partnership and require extra assistance and guidance from a strategic financial perspective.
As the business grows and becomes more complex, even if you have the capability to effectively monitor your financial controller and accountant in particular, it becomes questionable whether you have the capacity or if this is taking you away from growing the business. A part-time CFO can provide this oversight of your accounting functions, providing guidance and an expert skill set to ensure the delivery of this department.
One of the milestone developments of your business will be the creation of an advisory board. It could be the next step in reporting and governance or a pre-cursor to a board of directors. Whilst it is important to have an industry specialist and someone strong in governance such as a lawyer, having a part-time CFO member to provide strategic financial advice in the team is key to the success of the advisory board.
Different from classic business planning, the strategic variety (incorporating acquisition, exit and other strategic activities) involves a long term horizon and out-of-the-box thinking. A strategic acquisition plan helps to provide direction and focus. It points to specific and rapid growth plans with results that are to be achieved and establishes a course of action for achieving them.
A good business coaching provider will not only review your business for growth areas but review the ability of the senior team and the leadership. Business coaching provides developmental ideas that can increase performance from the top down and can provide a sounding board for the CEO and Managing Director on business pain points to be addressed.