University of GeorgiaSmall Business Development

Center

David Dunn

Financial Forecasting Maximizes Business Success

Introduction

• Background

• The Financial World has Changed

• Startup vs. Existing Businesses

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!

Breakeven Analysisthe Easy Way

• There it is

• Cost of Goods Sold

• What about adjustments?

Balance Sheet Sums It Up

• Often overlooked (avoided?)

• Importance

• P/L and cash flow impact

Case StudyBrandylyn Enterprises

• The research

• Building the case

• The output

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.

The The EndEnd