When people think about what makes a business profitable, they often picture the big moves like launching a new product, expanding to new markets, or hiring that game-changing team member. But from my experience, what actually powers long-term success is forecasting.
It’s not glamorous. It’s not exciting. And frankly, it doesn’t make for a great Instagram reel. But it is the habit that separates sustainable, profitable businesses from the ones that stall or worse, struggle.
However for a nerdy finance professional like myself, I love forecasting, I find it super exciting to plan out and give deep thought to your business ideas and goals.
The price of guesswork
I’ve seen it time and time again: smart, capable business owners making confident decisions based on what they think they know. And sometimes, they get lucky. But more often than not, they find themselves facing a painful financial reality.
Take a recent client, we’ll call her Sarah, who runs a successful product-based business. She was riding a wave of strong sales and decided to invest heavily in expanding her warehouse and hiring more staff. On paper, it looked like the next logical step. But what she didn’t account for was a seasonal dip in demand and a slowdown in supply chain timelines.
Within six months, cash flow was tight, her team was underutilised, and she was facing a six-figure shortfall.
The heartbreaking part? This could have been avoided with one unsexy, incredibly powerful habit: forecasting.
Forecasting isn’t just for big corporates
Forecasting doesn’t have to be complicated. At its core, it’s just a way to test your ideas against your numbers before you commit to action. Think of it like Google Maps for your business: you’re plotting your destination, but also seeing where the traffic might hit, and where detours may be necessary.
Every time you’re about to make a significant business decision, whether it’s hiring, investing, launching, or scaling, take the time to forecast even if it is a quick high level forecast. Some of the key questions to consider include:
- What will the cash flow look like in three, six, or twelve months?
- What assumptions are you making about sales, costs, or timing?
- How will you know if things are not going as expected? What metrics will we measure to ensure we are on track?
If Sarah had forecasted before making those warehouse and staffing decisions, she would have spotted the cash crunch before it happened. Better yet, she could have adjusted her strategy to ride out the seasonal lull without the stress.
Forecasting in action
We use our Investigate, Plan, Implement process to help clients build forecasts and run micro forecasts that actually work. This isn’t about creating a fancy spreadsheet once and never looking at it again, it’s about building a living, breathing financial model that gets updated as things change and guides smarter decisions.
- Investigate: We dive into your current numbers, understand your business model, and identify any hidden risks.
- Plan: Together, we map out your goals and test different scenarios, growth, contraction, new products, resources or team changes.
- Implement: We create a forecasting rhythm that keeps you ahead of the curve, with real-time visibility into what’s coming next.
Freedom starts with forecasting
The businesses that thrive especially in uncertain times aren’t the ones making the flashiest moves. They’re the ones with clarity. They have a good idea of what’s coming, they have a plan, and they’re not afraid to change course early when needed. The biggest part of this is that they have a great amount of information about their business and industry in order to be agile with decision making.
So if you’ve been running your business on gut feel, now’s the time to build the habit that leads to profit, confidence, and ultimately, freedom.
Forecast first. It might not feel exciting, but the results absolutely are.