The Number One Reason to Create a Financial Forecast

This is a guest post from Philip Campbell, who has just released the book: A Quick Start Guide to Financial Forecasting. 

From my CFO view of the world, there is really only one reason to create and maintain a reliable financial forecast in business.

To help you create a bigger and brighter financial future for you and your business.

Of course, a forecast isn’t the only tool you need to improve your financial results. But a reliable financial forecast is a surprisingly effective tool because it helps you drive growth, profitability, and cash flow higher and higher over time.

By driving growth, I mean that growing your business even modestly is very important because oftentimes if there is no growth in a business there is decay.

And you always have to be working on improving your profitability and trying to generate above average profitability in your business. If you have ever owned or worked in a business that wasn’t profitable, or that constantly struggled with profitability, you know that it can be a painful, almost gut-wrenching experience.

Being unprofitable is no fun at all. It will suck the life out of you.

Profitability is the cure.

And improving your cash flow extends past profitability. You need to make sure that your accounts receivable are being turned into cash quickly. You need to be on top of your inventory if you stock and sell physical products.

If you have debt, you have to have a good, strong cash flow to make sure you can service that debt and drive it down over time.

A reliable financial forecast isn’t the only tool you need to drive and improve your financial results.

But a reliable financial forecast is a powerful tool because it helps you more clearly see where your business is going. It helps you:

Define where your business is going financially (and where you want it to go).

Shine a light on the dangers and opportunities that lie ahead of you on your journey.

Create a roadmap to get you there safely and on time.

Monitor your pace and progress on your journey to success.

Do you have a clear view through the financial windshield of your business?

This is a guest post from Philip Campbell. Philip’s new book, A Quick Start Guide to Financial Forecasting is out now. Get it here!