Business owners around the world have weathered an incredible storm over the past year – the pandemic has interrupted global supply chains, bankrupted corporations, and changed the way customers behave for the foreseeable future. The gradual rollout of multiple vaccines is currently providing a glimmer of hope for a return to normalcy in the future, but there’s no question that it will be a slow trek back to that point.
This is a perfect time to start business planning for the next phase of the pandemic. Starting to think about recovery, re-scaling operations, and permanent changes to your set-up will leave you well prepared for whatever is coming next. Building an accurate cash-flow forecast is one of the best ways to plan for the future.
We’ve said it before, and it bears repeating. First and foremost: take direct action to safeguard the health of your employees and customers. Without appropriate measures in place to establish trust, business recovery will be difficult. Done? Good!
Building a cash flow forecast can be tricky, and there are more unknowns than usual. It’s difficult to know how the vaccine rollout will impact consumer behaviour and at what speed. Having a 6-month cash flow forecast for more than one scenario will help your business in this situation. Think about:
- Worst-case scenario
If you made it through 2020, you probably already know what this looks like. Assume your lowest revenues will continue, your costs will either maintain or rise, and supplier relationships with increased prices.
- Best-case scenario
Consider what things would look like with pre-pandemic or better revenue, operating costs streamlined for cost-savings, and a boost in sales.
- Most likely scenario
This one is probably going to fall somewhere in-between the best and worst scenarios. Assess your business trends over the past 12 months and be realistic.
This might feel like a painful exercise, but an accurate forecast is a vital tool for smaller businesses that may not have access to cash reserves. Knowing where you stand also builds business continuity and increased security for your employees. A path to recovery, and even growth, is beginning to appear. Having the right tools will set you on that path as fast as possible.
How can Halkin Business Partners help?
Our experienced CFO’s can help you build a realistic forecast, refine existing budgets, and get you on the road to post-pandemic success. Speak to a specialist at Halkin Business Partners to see how you can plan for a still-unknown future.