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Can forecasting help SMEs prepare for the future in uncertain economic times?

looking ahead using binocularsOur regular followers will know that we generally advise business owners to revisit and revise their plans and forecasts over the quiet Christmas period and to give some thought to setting goals for the coming year.
In the aftermath of the events of 2016 many will have found it harder than usual to see the way ahead given the uncertainties surrounding the economy both at home and in the wider world.

Predicting the future means understanding where you are and knowing what resources you have

Reviewing a business’ performance over the previous year is undoubtedly a worthwhile exercise for establishing its current position, including identifying any weaknesses in your financial position as well as those systems that should be improved.
A business that has existed for some years will have experience of a variety of trading conditions and how they were overcome to use as the basis for analysis.
It is also likely to have an established network of suppliers and clients/ customers for gathering information about options including sources of finance. Depending on the goods or services it supplies it will at least understand the competition it faces and be aware of the demand and future trends.
The relatively new SME will not have quite the same level of experience and information, although hopefully it will at least have carried out research into demand, likely customers and how to market to them, as well as having identified the level of investment needed.
Whether new or more established, both can use the techniques of a SWOT Analysis to identify their Strengths, Weaknesses, Opportunities and potential Threats to clarify their current position in an organised way and identify the So WHAT actions that arise from a SWOT Analysis.
Please refer to the K2 Knowledge Bank for more on SWOT Analysis and how to get the most out of them:
This preparation work will help with setting the following year’s goals.

The unanswerable questions and being prepared

The major problem facing all businesses at the start of 2017 is, of course, the economic uncertainty surrounding the possible actions of a new US President and the lengthy process of negotiating the UK’s exist from the EU.
crystal ballForecasting for a business against this background is certainly going to be tougher.
Goals will need to be set that make allowances for best and worst cases, regardless of whether a business is local or an exporter.
Absolute knowledge and control of cash flow, sales, invoicing and comparing monthly management accounts with the forecast as a regular review is likely to become imperative.
If possible, ensure there are at least some financial reserves to deal with the unexpected.
While it is plainly foolish, even if it were possible, to forecast the future in any detail, especially now, there will undoubtedly be unexpected opportunities as well as shocks.
Businesses will need to cultivate agile and flexible cultures, systems and processes to be prepared for both the opportunities and potential hazards of surviving and flourishing in the current economic climate. Courage and nerves of steel would probably help also.

Business Development & Marketing Cash Flow & Forecasting Finance General Rescue, Restructuring & Recovery Turnaround

Time for a Fresh Start. Take time to Re:flect

Blog Reflect Jan 5 2016It is all too easy during the first week back in the office to rush into work.
I hope that you have used the Christmas break to reflect on your business and personal priorities and consider what you want to achieve in 2016.
Once you get sucked into the day-to-day minutiae of work, those holiday initiatives quickly get buried rather than turned into plans and implemented.
I recommend using this first week in January as time for a fresh start, time to write down your ideas so your notes can act as a framework for considering them. This process of reflection allows you to consider them in more detail and where necessary gather more information before refining them into goals.
A useful way of thinking about ideas is to use Kipling’s Six Honest Men approach which seeks to answer the questions What and Why, Where, When, How and Who.
They would suggest using this first week to concentrate on ”What?” and “Why”. What are the potential opportunities? What do I want out of my business? Why am I working so hard? What are my/my business’s possible goals?
Over the next four weeks, we will encourage you to adopt a systematic and logical approach to setting achievable goals (what and why) before we identify the actions (where, when how and who) that will be needed to accomplish them.
For example, sounding out colleagues can help you clarify what may have only been a broad outline of an idea. They may also have innovative ideas to contribute as well as more hands-on experience of the practical implications of what is being considered. You might also ask if they are prepared to help you, especially if your ideas involve change.
Summarising the essential points at the end of this period is also crucial before progressing to the next stage which I will cover next week.
There are other benefits from involving colleagues. Consultation can also help to engage and motivate staff, get their buy-in and help them to understand the process so that when it comes time to implementing your plans they won’t be sabotaged.
(Image courtesy of pakorn at