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University of GeorgiaSmall Business Development
Center
David Dunn
Financial Forecasting Maximizes Business Success
Complexity vs. Simplicity
• Why complicate it?
• Simpler financial forecasting is good for:– Managers– Lenders– Others (CPA’s, consultants, etc.)
Overview of Spreadsheets
• Gazillions of forecasting spreadsheets
• Many (IMHO) are overly complicated• Many utilize several sheets• My spread sheet
– Direct input– One sheet– Produces P/L, CF, BE, & BS
Assumptions are the Backbone• Mandatory for comprehension of
forecast– Spreadsheet assumptions
• Should address all substantial financial events – Sales– COGS– Major or unusual expenses– Cash Collection terms– Loan terms
Forecasting Revenue/Expenses:
It isn’t Magic• Situation dictates ways to forecast• Sales can be tough
– Use historical info– Household Spending Guide– Inventory Turnover
• Cost of Goods Sold – Ind. Norm.• Research the expenses• Conservative• Use Common Sense
Cash FlowWhere Does It Come From? Where Does It
Go?• Cash is King• Help clients see cash movement• Tied to income statement &
balance sheet• Timing of collections• View balance as the checking
account• Uh-Oh, I’m seeing red!
What if . . . Happens?
• The best laid plans of mice and men . .
• Impact analysis
• Several scenarios
Wrapping It Up• One page format saves time, is easier to
understand & explain, & is easier to follow.
• Results please lenders, investors, etc. & give owners the tools to better understand their business.
• Don’t make it harder than it is.
• Let your Small Business Development Center help you.