By Sharon  Jones

No-one can predict with 100% accuracy what the future holds. However, when it comes to the business, you can get a lot more insight than you think you might be able to. Especially where finances are concerned. You won’t be able to predict the way you can utterly capture the market without any risk, but you can get a closer look at the data of your finances and figure out where it’s headed. You can even figure out the potential risks to make it as smooth as possible.

Photo by MiraDeShazer

Expenses to prep for

Rather than starting with your revenue, it’s essential to get an understanding of your expenses and your overhead. These are often the most concrete projections in your cash flow, with fixed costs often making a much larger proportion of them than variables. Staying ahead of your costs also means you have more time to cut them down. For instance, if you have worrying printing costs, you can start the switch to a paperless system. If the costs of labor for a certain process are too high, you can outsource them.

What’s coming in

The other half is figuring out what your anticipated revenue is. The best way to do this is to rely on the data available to you. For newer businesses, this means making both a conservative and aggressive estimate based on differing price points, marketing channel usage, sales staff and so on. For those who have been in businesses for years, compare past sales with investments you intend on making with estimates on their return. If you’re invoicing your clients and customers, then using tips from places like www.xero.com can help you make sure you’re getting everything you’re owed sooner and not throwing off your short-term projections.

The bumps on the road

A good projection is always going to have some wiggle room. Unless you get it dead wrong, however, it should be somewhere between your conservative and aggressive estimates. The times that revenue is below conservative estimates is often due to the big, unexpected costs that aren’t your fault. There is something you can do about them, however. Services like www.equifyllc.com allow you to better understand the risks to the business depending on your specific circumstances, to help you better craft an insurance plan. If you leave it to yourself to pay for every bump in the road out of your own pocket, it can get in the way of your cash flow and disrupt your current business plans, setting you back if not endangering the business in total.

A business owner has to be future-minded. Reacting to the realities of the market and your finances as they happen is going to leave you a step behind, disrupting you more often than not. Understand the cash you have coming to you and see it in your hands sooner. Know the expenses you can expect to accommodate and how to make sure you can handle them. Divine the serious financial risks and protect yourself against them. It won’t future-proof the business with total certainty, but it will make it a lot easier to better face the financial challenges ahead.

 

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