Financial forecasting is one of the most important business tools out there – it can help you plan for growth, to consider issues in your market and to see where you might be in a year or two. For me, financial forecasting is a key part of my planning process. If you’re new to financial forecasting or finding it hard to get sorted, then read on for these three tips for success:

1. Make Sure Your Finances are In Order
Making sure that your businesses finances are in order will make such a huge difference to doing your financial forecasting. Having a professional accountant is one of those business expenses I consider to be absolutely essential. If you’re looking for an accountant that specialises in contractors, check out Brookson One for their range of services that will suit all types of businesses. They have a variety of helpful business related guides on their website that you can download for free too, helping small business owners.

2. Focus on Key Factors
Each business is so different, there’s no one size fits all for financial forecasting. You’re going to want to focus on the main aspects of your own business, such as the relationship between volume and pricing. For example if you’re in an industry where demand is decreasing, such as the magazine industry, you’re going to want to consider that volume might actually decrease in the years to come. Take some time to consider the key factors for your business, so you can have a forecast that is more realistic and accurate.

3. Start in the Past
It’s going to be important to take a long look backwards before you even go forwards. Look at your trends over the past few years, to see what kind of patterns exist. Is your business cyclic? Many businesses are busier during the seasonal months, but does that hold true for yours? When are the quieter months? With my business, for example, the summer months tend to be the busiest. Based on the average of a month I can do a forecast for the rest of the year based on previous year trends.

Financial forecasting is an important aspect of any business, allowing you to better plan for the future. Hopefully these tips make financial forecasting easier than ever for you.