Business Forecasts
Business forecasts are synonymous with the word budget. A forecast provides management with a direction of expected month-to-month operations. The benefits of a forecast include the following:
- Puts you in control of your business rather than your business in control of you
- Allows management to make on the spot adjustments when expected operations are not being achieved
- Essential for monitoring the product cost components of material, labor and overhead to maintain the desired gross profit margin (example: manufacturing companies)
- Mandatory in today’s economic environment for non-profit organizations
Business Projections
Business projections are prepared under a “what if” transaction and are the due diligence step in the decision making process of:
- A synergistic business acquisition
- Construction or acquisition of a building
Business forecasts are generally prepared on a monthly, twelve month forward outlook. Business projections are generally prepared over a three year period, month-to-month. Both business forecasts and projections consist of the following:
- Statements of income
- Statements of cash flow (tax effected)
- Balance sheets
- Supporting schedules