Future planning for your business
Financial projections for your business – is there any real benefit?
IF you have ever wondered why banks, investors, lenders, start-up financiers etc. all require a full set of 3-year projections for your new business? The reason is quite simple, these experienced professionals are looking to find out the following:
- Firstly, do you have a proper financial plan for your business?
- Do these numbers highlight any problems for the business over the coming months and years?
- Is the business profitable or loss making at any stage?
- What is the working capital requirement for this business?
Now the reality is that these projections that you have made may not exactly resemble the actual business performance. But, in producing these figures you start mapping out your financial plan for your business and you will start seeing problems before they arise and you can plan how you will overcome them earlier.
For example, you will see that in month 12 you will require additional working capital, or by taking on additional sales staff in year 2, you will make a loss for 5 months until sales increase.
By having this information, you can speak to your lenders about additional finance to assist with your working capital requirements, or stagger the introduction of additional sales staff to maintain profitability.
It is all about maintaining financial control over this key area of your business!
IF you need assistance with preparing financial projections for your business, give John Carolan or Brenda Smith a call on 01-5445 375.