All businesses start with a dream. These dreams are varied and diverse but all are similar in a few ways
- You need to make more money than you spend.
- You want your businesses to grow.
- Some want to make a difference in the world.
- You and your employees want to keep or even improve a certain lifestyle.
So why do so many businesses fail to achieve some or all of these objectives?
The reason they fail to grow and thrive is because a dream is not a plan or a strategy. Successful businesses break the growth dream of their business into many small success milestones. They focus on the small goals and not the bigger ones.
They use these small success milestones to review, learn and adjust.
The magic behind cash flow forecasts
One of the most effective ways to execute a strategy using small milestones is with a cashflow forecast.
A cashflow forecast puts your dreams around business growth into hard numbers.
A cash flow forecast is a monthly plan on what you plan to sell and spend. The success of your business is measured in the difference between what you spend and what you receive.
A cash flow forecast is a valuable business growth planning tool. It asks all the right questions and breaks through the reality distortion field business owners create. Every number you put into a forecast asks an important question, ‘What do I expect or plan to spend or receive for this part of the business this month?’ The answer is often ‘I don’t’ know’.
That’s when the magic starts to happen.
Small milestones for big success
In the process of answering the question, you start the strategic and operational thinking behind your dream. By the time you have completed the cash flow forecast, your dream has been thought through and laid out as a series of well-defined milestones.
A cash flow forecast gives you a very clear path to progress based on real, measurable numbers already recorded through your accounts system. All you have to do each month is complete a forecast for actual comparison. You immediately have insight of the business areas for strategic growth. The highlighted area of your forecast under or over budget form the basis of your monthly business review. This simple exercise:
- Creates the basis of your growth and learning.
- Gives you a simple way to measure and adjust.
- Breaks the big and hard to achieve into the small and achievable.
The end result is you focus on the small each goals each month. Bit by bit you build your dream into the reality of growing successful business.
How to get an easy start on cash flow forecasts
If you would like more information on how a simple tool can help you perform quick and easy cash flow forecasts, get started using Reep.