After a super fun, whirlwind birthday trip a couple weeks ago with little sleep and amazing weather, I sat at my computer, trying to transition back into the day-to-day of running a business. Then I remembered that I had to write to you.
I looked out the window into the orange smog that finally hit NYC last week. I wondered what advice to give to help you face current financial challenges and ease fears around an economy riddled with:
High costs
High interest rates for financing
Talks of another recession
Honestly, it is hard to find the right solution to financial challenges these days.
I know it’s been hard for many business owners to generate more business this year and access capital from lenders since they’ve tightened their credit requirements.
But the one thing that has worked well for our clients is looking at different financial scenarios for their businesses over the next six to twelve months.
Even though we created a budget for 2023, we are now 6 months into the year, and have a little more clarity around how 2023 will pan out.
Doing a re-forecast of 2023 and creating different scenarios around how cash will flow into and out of the business is the best step you can take right now.
Before we get further in this message, let me clarify a few things.
- A budget is a financial plan that outlines the estimated income and expenses for your company over a specific period, typically over the coming 12 months.
- A re-forecast is a revision or update of the budget based on actual results, new information, emerging trends or changing assumptions. Since we are in June, we have five months of actual data and new information about how income, expenses, the value of assets and liabilities will fluctuate over the next seven months. The combination of five months of actuals, plus new predictions about the rest of the year is what makes up a re-forecast.
12 months of Predicted #s = 2023 Budget
5 months Actual #s (+) 7 months of Newly Predicted #s = 2023 Re-forecast
Work with a fractional CFO to create various scenarios of how the rest of 2023 may play out.
By doing this exercise, you will break free of the hazy conditions and have clarity into:
- How much more revenue you need to generate to make your 2023 goal
- What to do to improve or sustain profit margins
- What you can afford to spend or invest money in right now
- When you need additional sources of cash
Our fractional CFOs are here if you need support.
Click Here to Schedule a Financial Strategy Call
Tricia Taitt is the CEO and Chief Financial Choreographer of FinCore. She holds an M.B.A from The Fuqua School of Business of Duke University, and a BS in Economics with a Finance concentration from The Wharton School at the University of Pennsylvania. For over 20 years, she’s been a finance professional. Half of the time was spent working on Wall Street while the other half was spent in the trenches side by side with small business owners. As a result of working with FinCore, clients have been able to take control of their numbers and feel more confident in their ability to make decisions, while increasing profits by 10% and building a cash stash to invest in growth. Follow Tricia on LinkedIn and Instagram.