As a small business owner, it is necessary to make financial projections to give an accurate sense of what the future looks like. Year-end financial projections for the year ahead are crucial towards making better decisions and keeping your small business in check. These financial projections should be based on your small business’s accounting data, such as expenses and cash flow. Using this information can help you better guide your company in a goal-oriented manner during 2014. Read on for some types of financial projections that could aid your small business.
1. Cash Flow Forecast
A cash flow forecast consists of a breakdown of the capital that leaves and enters your small business. Note that you should pay attention to both weekly and monthly numbers. Creating a cash flow forecast will give you an idea of your company’s projected financial health, and reviewing the forecast regularly will allow you to notice and fix potential problems before they happen.
2. Sales Forecast
A sales forecast is a prediction of your company’s monthly sales for the upcoming year. The document should include details about all the items that your company offers and should estimate how much of each item you predict to sell. This is helpful to know, especially if your company tends to experience more success during certain times of the year.
3. Expense Budget
After setting financial goals for your small business in the upcoming year, it is helpful to write up an expense budget, to get a sense of how much it will cost for you to meet your goals. A projected expense budget also helps you separate fixed costs from variable cost, thus allowing you to see in which business areas you can cut costs.
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