The issue of the most financial forecasting is too detailed. A financial forecasting shouldn’t be an exercise where you try to guess what are you going to spend in the next six month. Check out this video and see how to do a better forecasting that tie to your goal.

Topic: The Better Way to Do Financial Forecasting

The issue of most financial forecasting

[00:44] —The issue of most financial forecasting — too detailed

It’s impossible for us to expect what will happen in the next six month. However, we’ve seen many of our clients have received the cash forecasting which is too detailed and probably will break within two months.

What is the better way to do financial forecasting?

[00:54] Instead of guessing what will happen in the future, focus on the things you must accomplish over the next year. Think about what is your goal for the next year? What are the top 5 priorities that can help you to achieve the goal? List out your five priorities and how much it needs. Start planning from there, budget those out, and build your financial from there.

Example

If your a $2 million agency that plans to grow revenue in the next year, what is the 5 priorities that can help you achieve that? It can be hiring a salesman, more Facebook ad, expand your distribution channels, diversify your offering, or even change your price strategies. Whatever it is, budget those things out and you’ll have a better version of cash forecasting that your CFO/accountant has provided you.

Key takeaways

• Recognize your goal

Recognize what are the goals you’d like to hit in the next year?

• Identify the top five priorities

Since you’ve recognized your goal, try to use priority star to help you identify the top five priorities which are aligned with the goal.

• Plan out the expenses

Once you have the goal and the priorities, you can start from there to plan out your budget. How much may those priorities cost you? Budget those out, and you’ll have a clear picture that how much it’ll cost you to achieve your goal in the next year.