Six Ways to Make Strong Financial Projections For Your Small Business
By Monika Sylvester
When you are preparing your financial projections there are some specific things that you can do to help make strongest, accurate forecast possible.
- Financial projections are based off of statistics, facts, and actual numbers. It is difficult to do them as a business owner without including dreams and emotions into the numbers. Consider hiring a professional to help you with these projections so they are as accurate as possible.
- Study and compare similar businesses. You need to know and understand what the industry trends are for businesses similar to yours. Most likely, you did this during your business plan but it does need to be addressed continuously to make sure that you are working off the right foundation for your projections.
- Talk with other small business owners and find out the trends that they are experiencing. Many of them have had countless years of business experience and can offer some valuable insight. One of the best ways to do this is through economic forums and events hosted by local business or commerce groups.
- Strong financial projections are the number one thing that will attract solid investors if you ever need them. Whether the investor is to be a business partner, a bank, or a private investor they will want to see those numbers. They will scrutinize the numbers closely to make sure your expectations are realistic. No pie in the sky numbers, please.
- Make sure you are an expert in your business or you have one by your side. If you started your business because it was a hobby or you were passionate about it and aren't really into the "details" make sure you get up to speed. Nothing decreases confidence in a business more quickly than feeling like the owner does not truly grasp the business and its concepts.
- Solid financial projections are the best way to be prepared for company growth and everything else that happens. You'll be looking at new employees, possibly a new space, and other expenses associated with growth. If you are properly prepared those transitions will be exciting, positive, and relatively seamless.
If you follow these simple guidelines and tips for creating a strong financial projection the entire process should provide answers. You should get a clear and precise idea of which way your business is heading, what you are doing correctly, and what needs to be changed. The result will be a strong business that can weather any storms that may come its way.
Author Monika Sylvester "How I went from $0 Business credit to over $300,000"
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