Forecasting

Grimsby Accountants A P Robinson & Co's Marketing Manager Lizzy Dale offers light advice on how to plan for a financially successful 2008.

As with many editorial columns bombarding you with tag lines and preaching the best advice; this overview of forecasting serves to placate your palate of accounting and drum up an additional resolution for the New Year: To make a business plan!

All businesses should make predictions for future growth. By annually updating your original plans you will gain a greater insight into where your business is heading and how financially successful it could be.

The first step is to make a simple list of realistic key objectives for the next 12 months. These objectives can play a central role in measuring your success and helping to drive the performance of your business over the course of the year.

The second step is to establish a sales and marketing plan. This is the key to setting a sales forecast as your knowledge of the market will help to identify where your products or services can thrive. The actual process of recording the sales plan forces you to evaluate the impact of future events on projected sales.

Gather the team together for a brainstorming session; their input will lead to initiatives and ideas on areas from product development, to pricing strategies, to marketing campaigns, to customer buying behaviour. A great way to structure this session would be to use SWOT analysis (strengths, weaknesses, opportunities and threats); to evaluate where focus is needed and where improvements can be made.

In terms of marketing planning a DRIP analysis should be considered to see whether you, differentiate from the competition; remind and interest your target audience and consequently persuade them to purchase your products or services. Again, with this understanding you can make head way in enhancing your position and promotion in the market you operate in.

The third step is to add numbers to the assumptions in your plan. Calculating monthly sales volumes and values should not prove difficult once a vision for sales has been recorded. Whether a simple spreadsheet or a specialist forecasting package is required will depend on the size and complexity of your business and product mix.

Incorporating 'what if' scenarios into the spreadsheet will also provide a clearer picture of how different results will be dependent on actions taken. Regular monitoring of actual performance in comparison to the forecast will enable trends and sales shortfalls to be proactively addressed.

So, to sum up, a sales and marketing forecast can provide the backbone for a full financial forecast or a cash flow statement where these are required. Can you visualise your sales pipeline for the next 12 months? If you need a sounding board and feel our services can help your business, do not hesitate to get in touch.

Source: Grimsby Telegraph, 2nd January 2008