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Cash Flow Forecasts

Guest post by: Russell Bowyer

Article Overview: Companies with strategic business plans enjoy greater revenue and profit growth than companies that don't have one! In 1993, AT&T commissioned a study of small businesses. The survey found that companies that had a business plan were far more likely to succeed than those that did not. Notably, only 42 percent of the businesses surveyed in the AT&T study had a formal business plan - a statistic that hasn't changed much in the past 10 or so years. Yet according to more recent studies, companies with a strategic plan enjoy greater revenue and profit growth than companies that don't have one, and their failure rate is much lower.

Cash Flow Forecasts

Companies with strategic business plans enjoy greater revenue and profit growth than companies that don't have one!

In 1993, AT&T commissioned a study of small businesses. The survey found that companies that had a business plan were far more likely to succeed than those that did not. Notably, only 42 percent of the businesses surveyed in the AT&T study had a formal business plan - a statistic that hasn't changed much in the past 10 or so years. Yet according to more recent studies, companies with a strategic plan enjoy greater revenue and profit growth than companies that don't have one, and their failure rate is much lower.

Commenting on the study, Ian MacMillan, the director of the Sol C. Snider Entrepreneurial Centre at the University of Pennsylvania's Wharton School said, "A comprehensive and complete business plan is crucial to the success of any business."

Most small businesses fail within two-to-five years of start up, and failure rates are significantly higher among businesses without a formal plan, can you afford not to have one? Luckily, thanks to Bowraven's Cash Flow System, putting the crucial numbers side of the plan together has never been easier.

Want to be taken seriously

It is likely that most small businesses can operate just fine without a mission statement and accounting software during their first year or so of operation. However, if you want to secure a bank or small-business loan, be taken seriously by investors or improve your chances of long-term success, a business plan and cash forecasts are a must.

Save Time

Business owners who don't have a plan don't realize that it can save them time. People tend to think about it as something that they can put off because they don't have time to prepare it. In the meantime, they're losing the potential to do better. A good business plan not only helps you secure funding, it serves as a road map, a diagnostic tool and an employee motivator.

Imagine if you will, trying to get from one side of America to the other without a road map or even crossing from one side to the other of a major city like say London without an A to Z map - You could do it, but with a road map your journey time will be reduced considerably and it will be a guaranteed success! Without a road map your journey time will be longer, you will end up using more fuel and having to spend more time stopping for food etc. Which if compared to a business without a plan and cash and profit forecasts would be to have a business with higher costs and lower revenues. This would reduce any guarantee of success or certainly taking a longer time to achieve success!

Having a Forecasting Template will save you time from your preparing your own forecasts from scratch.

If you use cash flow software all of the hard work has been done for you, which means that you only have to enter your data and out pop the reports for your cash and profit forecasts.

What should you look for in cash flow software?

Is it Easy to Use

I would put this at the top of the list of benefits software should have. If it is not easy to set up and use then there is no point in having the software in the first place!

Low cost

Most businesses want to save money and do not want to spendtoo much money on software if they can help it. So do your research and find the best software for the price you are happy to pay. Cash flow software ranges from around £10 to several hundreds of Pounds. Some of the more expensive software becomes too complicated to use, which defeats the object of the exercise.

Flexible

Is the software flexible so that it can be used with every type of business. Also, can it be usedfor a new business just starting out or for a business which is looking for further funding or for producing cash and profit forecasts for management?

Cash flow forecasts should be prepared and used by all businesses most of the time and the cash flow forecast can serve three main purposes; firstly, to help prepare for the inevitable cash flow peaks and troughs that all businesses go through; secondly, to forecast how much funding the business might need by way of an overdraft facility or bank loan for expansion plans; thirdly, the forecast, or certainly the profit element of the forecast, can be used as a budgeting tool for the expenditure for the company and as a target for the sales team of the business.

Cash flow forecast can be used to complement month end and year end accounts preparation. They can be used for both internal management use or for external use for a lender, such as a bank to evaluate how you will be able to repay the funding.

Many businesses fail due to a lack of sound financial forecasting, so to have a well structured and thought out cash and profit forecast is vital to the starting of a business as it is in the continuing success of an existing company.

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Article Tags: business plans, cash flow forecasting, cash flow forecasting software, cash flow forecasts, cash flow system, failure rate, formal business plan, profit growth, small businesses, statistic, strategic plan, survey found that



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