A couple weeks I started talking about how I function as a GPS for my clients businesses. Today I’m going to talk about TIMING. Most of us use a navigation map like Waze or Google Maps to find out how long it’s going to take to get somewhere (and that’s a time to BEAT, by the way). The different routes are shown, along with how long each will take you to arrive at your final destination.
Accountants use financial information to ensure business decisions are made at the right time, when the right resources are available. I had a client that wanted to start a farm. She believed that within three years of starting the farm, she would be a million-dollar enterprise. Based on the number of animals she was starting with as her herd stock, average number of births, and what she wanted to keep the herd size to, the numbers didn’t show she would be at her goal until somewhere in her 10th year, and that was a strong MAYBE at that.
How did the timing affect her business decisions? This information had impacts on when she could hire staff to work the farm, when she could quit her day job, when she could buy new land, and most importantly, what her repayment schedule for the bank would be.
Forecasts are not meant to show you what you want to see. They’re meant to be fact-based (with a small dose of wishing), to show you what is realistic. You aren’t necessarily going to like what the forecast shows. But you need to be wise in how you use that information. Say you’re going for a loan, the bank wants to see a realistic forecast rather than a hopeful one. A forecast with solid facts to back it up is much more believable than a forecast based on wishes and rainbows, sorry.
Use your forecast to set realistic goals for the future. We’ve all heard of setting SMART goals (specific, measured, attainable, realistic and timely). These goals help you work hard, but also help you to keep from burning the candle at both ends or spinning your wheels aimlessly.
How can a forecast help you set your goals for the next week?