You know where the business has been
You know where the business has been, and maybe where it is now, but do you know where it is going ?
For many SME’s the only way owner managers and directors become formally aware of the state of the company is when the annual accounts are produced. Periodic management accounts do also provide guidance on performance but even this information is historic.
Forecasting is a technique not often carried out except on an annual basis to produce a budget. Unfortunately the failure of the banking system, the subsequent recession and the negative impact this had on company profits highlighted that many businesses do not use forecasting as a management tool. They could not adapt their business quickly enough or restructure when the economy took a dramatic downturn, and there were many business failures.
Cash flow forecasting and retaining overdraft limits, maintaining / gaining funding continue to be critical path issues for the survival of many SME’s and, in some instances, the attention of senior management is diverted from the commercial and operational activities that drive sales and margin, and finance staff become more transactionally focused on day to day cash flow issues.
With the stabilisation of the economy, and even some tentative signs of a recovery, there is an opportunity for those SME’s to take advantage and grow, by implementing robust forecasting, re-evaluating strategy / funding, updating business plans or restructuring the business for the future, If there is a resource gap; either not having the time or staff with the skill set to drive the necessary changes, an interim finance resource could be the solution.
Contact MW Interim Finance to see how we can assist your business.