As part of our 8 steps, we help our clients to forecast the numbers in their business and understand the numbers that need to be achieved for them to reach their goals, objectives and aspirations.

If you know your destination, then you are more likely to get there, rather than just drifting along with hope and not even knowing if you achieved what you really want.

We help our clients to forecast in line with their vision. We work with our clients to understand what needs to be achieved in the short term, such as the next 90 days or year, and look ahead to ensure the forecasted revenue, margins, profit, balance sheet value and cashflow link with their objectives.

Do you complete a sensitivity analysis of your forecast?

We explore the ‘what if’ questions with our clients and undertake a sensitivity analysis of their forecast. This ensures that our clients are prepared for many ‘What if’ scenarios, which from feedback we know has been well received by the banks.

Here are five areas that you could ask yourself

  1. What would be the impact of losing your best customer? How would this impact your turnover? what cost savings either direct or indirect costs would this save?
  2. What if your supplier/s increased your cost of sales? Would you be able to increase your related sales price? What would be the impact on your margin? If your gross profit reduced, what action may you take to retain your bottom line return?
  3. What if you lost your best employee to a competitor? What would be the cost of replacement such as salary increase or recruitment agency costs? What would be the realistic impact of the handover and induction period? If a sales person, how would this impact your pipeline?
  4. What would be the impact of increased premises costs such as an upward rent hike? Do you have a contingency option and if so, what would be the total related cost of moving? If you wanted to challenge the rent review, what would be the likely legal costs?
  5. What would be the impact of a ‘disaster recovery’ situation? What would be the cost of a fire or flood in your business? Is your level of insurance sufficient or do you need to factor additional costs in case of such a situation? What would be the cost and impact of any downtime, even if just a few days disruption? If you were not trading, how would this impact your customer and supplier agreements, costs and relationships?

Just some of the questions amongst many we may ask when exploring the sensitivity of your forecast.

If you would like to discuss a forecast and / or sensitivity analysis for your business, then please call us on 01865 379272 or complete our online contact form

Sage Accountant Partner Logoiris kashflowFreeagent