Tips for Small Businesses: 6 Key Business Decisions Made Easier with a Forecast
Life is unpredictable, and even more so for small and medium-sized business owners. Costs like rent, insurance, and materials can rise with little warning. Customer preferences can shift. A construction project next door can make it hard for patrons and deliveries to get to your store or restaurant. Cash flow disruptions can come at you from every angle. In the end, it's cash flow that keeps your business moving—and a cash flow forecast that helps keep it on track.
Cash flow is the #1 reason small businesses fail, with 82% of owners citing poor cash flow management as the main cause.
Small and medium-sized businesses generally work on tight margins. Without a financial safety net, unexpected costs or slowdowns can squeeze you even further.
That's why forecasting is the mainstay of thriving businesses, not just big businesses, for every business. Cash flow forecasting helps you gauge what's ahead, so you can:
Avoid overspending or overbuying
Plan for busier times or seasonal dips
Stay ahead of funding needs before your situation becomes urgent
With a forecast, your monthly finances stop being a mystery and start becoming a strategic lever.
Here are 6 moments where a solid cash flow forecast can make the difference between moving forward, and stalling out:
Managing cash flow: A forecast lets you look ahead and prepare for slow payments, seasonal changes, and potential rising costs, when there's more cash going out than coming in.
Preparing for big purchases: Yes, things can happen suddenly, but, to a certain degree, you can generally anticipate large purchases. Your truck, air conditioning, or computer system is past its expected life? You have a major project in the pipeline that requires more equipment? Factor the cost of these purchases into your forecast so that you're not caught short of funds when the moment comes.
Planning for inventory: So that you don't run out of inventory, you have to look ahead at when you'll need to place orders and have the cash on hand to pay. Take time to gauge demand carefully so you don't underbuy, or, conversely, overstock and face costly carrying fees or wasted inventory.
Managing payroll: A forecast lets you plan ahead and see whether you can afford to expand your team and take advantage of opportunities, as well as keep staff during slow periods. For many businesses, carrying a trusted, skilled core team through business lulls saves more than the repeated expense of hiring and training new staff.
Planning for expansion: When opportunity calls, you want to have the funds to move. Is a desirable new location becoming available? Is a competitor leaving the market? Has demand for your goods or services grown so much that you need larger facilities and more staff? Forecasting lets you know whether you can cover these expenses with available cash, or if you'll need outside funding.
Investing in renovations: Whether it's functional—like a new roof, kitchen, or bathroom; aesthetic, like changing the flow of a space or its decor; or compliance-related, like bringing a structure up to code, a forecast helps you know whether you'll have the cash to pay for these or need short-term financing.
Understanding what may lie ahead positions you to make more informed business decisions.
Fast, Flexible Funding that Supports Your Cash Flow
With a 12-month forecast in hand, you should have clear insight into when your cash flow is fine and when you may temporarily fall short. In times of a cash flow gap, short-term funding can keep your operations running, your expansion on track, or your trusted team together.
With flexible terms from several weeks to 18 months, Fora Financial works fast to get you the money you need, exactly when you need it. We specialize in working with small and medium-sized businesses so we understand that the last thing you want is a paper-heavy process or approvals that take weeks. We provide approvals within hours, funding within days, real support, and no surprise fees or limits on how you use the funds.
Want to learn more about cash flow forecasting? Download our free ebook: Plan Better For What's Ahead: Forecasting Made Simple For Small Businesses.
And to jumpstart your cash flow forecast, read our blog post: 5 Simple Steps for Building a Cash Flow Forecast.
Since 2008, Fora Financial has distributed $4 billion to 55,000 businesses. Click here or call (877) 419-3568 for more information on how Fora Financial's working capital solutions can help your business thrive.
