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How To Ace Forecasting & Growth Webinar

Introduction

Simon Farmilo - Speaker
Simon Farmilo, Director of Strategic Partnerships

 

Good afternoon and a very warm welcome to this business educational webinar on how to ace forecasting and growth for your business.

As a business, I know I understand time is precious. So thank you very much for being with us. And I’m sure you’re going to get a lot out of it today, or at least a few gems that you can take away and apply to your own business. My name is Simon Farmilo. I’m the director of strategic partnerships here at Capify.

We’re an alternative lender to small and medium businesses. And we’re excited to be running the series of webinars and partnerships, We’ve partnered with Osome, who are a global company and one of the UK’s leading bookkeeping and accounting software and service providers.

Today’s webinar will be run by Osome’s Taimur Ghafoor, who is a senior accountant and has a wealth of experience in business financial management working across a variety of industries.

Just a reminder, there will be time for q&a at the end of the session. And anytime you can put your questions in the chat on the right-hand side of your screen, we encourage you to make use of this opportunity during our short time to give it today. Don’t forget, we have more great webinars coming up, be sure to keep a lookout for them.

The next webinar will take place on Wednesday 21st of July again at 1 pm. We will be talking about the best practices lessons and guidance on how to grow past the 1 million revenue map. So make sure you come along to that.

Finally, the good news is that all attendees here today will be receiving free access to some bookkeeping and accounting services for 30 days, we’ll share a link in the comment section that you can follow to claim this.

Without any further ado, let me hand over now to today’s expert to move to begin our session on how to ace forecasting and growth for your business. Thanks, Taimur.

 

Presentation

Taimur Ghafoor - Speaker
Taimur Ghafoor, Senior Accountant

 

Thank you, Simon, for thank you for arranging this. And thank you everyone for joining. So as Simon said, we’re talking about forecasting and how to use forecasting for the announcement of your business. So I’m going to share a presentation and then start talking.

So the topic for today, as Simon mentioned, is How To Ace Forecasting and Growth for your business. And then we’ll have a q&a. Agenda’s are; first of all, a little bit about who we are Osome and what we do exactly. Then we’ll talk a little bit about the fundamentals of forecasting revenue and growth, forecasting phases, and key definition.

I’ll give you some top tips of forecasting revenue growth, and then how forecasting can actually help you with the startup specifically, and then common mistakes or tips that you can do to avoid to make sure that you don’t fall into the forecasting errors that normally businesses go through. So we are Osome. We are a non-traditional accounting firm that provides automated bookkeeping software with the help of dedicated accountants and bookkeeper.

So what we do is heavily rely on technology and enhance the industry into more of an automation using AI and combine all of the understanding and knowledge of the industry to automate the whole process. So the accountants can actually provide more valuable information like this, for example, when I’m presenting about forecasting, and understanding the business itself.
What we’re trying to do is let the computer do the basic work, which is bookkeeping and accounting, and normal management approach where we provide more valuable information on how it actually works. We have also produced a live chat system, which isvery informal way to contact your accountant rather than looking in appointment, you literally just write a message down, send them pictures, and then you know, you’ll get your accounting services done. So it’s a very informal, very advanced way of doing your bookkeeping and accounting.

A little bit about myself, I’ve been in these different industries for almost six years have been an e commerce specialist. I’ve been to solicitors, charities and different accounting firms. Currently, I’m working towards my final a CCA exam, and I manage a portfolio of more than 200 clients at any point in time.

That’s a little bit about myself. But now let’s jump on to the webinar itself.

 

Fundamentals of Forecasting Revenue & Growth

So what is forecasting? And why do we need a complete separate topic about it? And why do we need to discuss a lot more in detail because it’s crucial. It’s really important for your business, to control your business to understand what your business is doing and where you need to be, and how all of it looks in terms of actual physical numbers.

It’s a technique that uses historical data. That historical data can be your own historical data from the past few months or someone similar in your shoes doing the same thing. You can use the data to make an informed report and estimate that predicts your future and tells you the direction that your business would go into. And that it uses, as I said, historic data trends and understanding of the industry and helps you combine all of that, to tell you where you would want where you could go. So it’s kind of predicting the future, and but doing it in a way that is more accurate and more reliable.

It helps you, again, sustain your business because it helps you control and keeps you focused on a direction that you need to be. But what it should do is mirror your business plan as well. So if you start a business today, and you want to see your business in six months time at this very specific position, and you have planned for that your forecasting should mirror that. And it should be exactly what it is with a little bit of differences. And you need to make efforts to make that changes to make it exactly how your business plan is.

So there’s two ways to do it as a whole, quantitative and qualitative. Now, quantitative works on very specific numbers. For example, how much did you meet sales in last six months, or what were your expenses and use that information to forecast what will happen going forward where the industry is going, what the percentage changes would be and how you would how your books will look in the next six months. Call today is slightly different in a way which uses more of information of value, like value from expertise and trend of the market, and then understand all of that and produce a report that shows if you follow certain parts, this is where your business would go.

So in essence, the fundamental of forecast is to just understand where you are, where you could be using different types of information. And then use that forecast to plan and actually operate your business. Keep it very simple. Because when we hear about forecasting, we normally think about, you know being used by big organisations, and it you know, you need a very technical understanding of behind it, it’s actually a very simple idea, which can help you grow your business in a very different way than you would do without it. There is a bit of an understanding that you know, what is in budgeting, budgeting, and what’s the main difference between a forecast and a budget. And the fundamental difference is, budget is where you want to be. As I said, that’s probably a plan that this is what I’m budgeting and this will be in next few months. forecasting is then you sit down and actually use all of the historic information and see where you actually will be. And that’s your job, you need to close that gap between the forecast and budget and make your business streamline and streamline and then compare it how it works.

Fundamentals of Forecasting Revenue & Growth
Forecasting Phases

Forecasting Phases

Let’s jump into the phases of forecasting.

So, as I mentioned, the first thing is to collect the data the data could be historical, or it could be quantitative, which is you know, expertise ideas market situation, you will identify the significant events and regular events that happen and accommodate that in your finding, you will see what are the demands and the behaviour of the market and put that in again in your forecasting.

Once you have all of that once you have all these three stages, you make this final report and then you start working towards it on regular basis. Now as in when you start getting the results on monthly basis, for example, you forecasted your sales to be 100,000 pounds by the end of six months. You only made 80,000. So after six months, you will compare it as your fourth phase and see where the differences what happened. Why were you not able to achieve what you thought you will be able to achieve?

Then you will see that do you need to adjust your forecast? Or do you think the reality is different, or you could have done something more, maybe you could have done more marketing to get more sales. And so then you adjust your forecast and you adjust your business plan based on that. And then you run the cycle again. So you keep on doing this to see where your business is where you want to be and again, control any behaviours that changes during this whole process.

Key Definitions

So before jumping into more detail and understanding how actually it affects on your regular day-to-day business, let’s understand some key definitions because we’ll be talking about them. And we need to know the jargon and how it actually works.

So return on investment is a really key term that is used a lot in budgeting and forecasting because it helps you understand the actual performance of the investors. So if someone invests in your business, they want to see what the return on that investment is the it’s a formula that you use to generate a percentage and that percentage shows for every pound that they’ve invested in you how much return they’re going to get back. This shows the efficiency and and this shows the actual number that the investors can bring in, and when you’re forecasting, you need to incorporate this. Because if you’re using someone else’s money, they will want to see how your forecasting is. And based on that, they will be willing to give you or lend you more money, because they will see if your forecast our return on investment is higher than they’ll probably be willing to give you higher investment.

There’s something called bottom up forecasting, which works on estimating company’s future performance by starting low level data. So things like what what is happening within the organisation, how the expenses are working? What are the working capital available? And how will actually how will it build-up to create, you know, proper business. The other way to do it is top down where you actually look at the market itself, see how the market is trending, and then forecast, using that information as mean, and then using your expenses. Again, these are some jargons that people use in forecasting. Again, just to help you understand this and how it actually works.

Key Definitions
Top Tips for Forecasting and Growth

Top Tips for Forecasting and Growth

So let’s start with some top tips.

The first thing you need to do and understand is why and who and so if you are getting into a project and you’re forecasting it, you need to exactly understand why do you need to focus for this, because forecasting can be costly, you know, even you’re spending your personal time on it, and compare yourself with an hourly rate that you would have been paid if you weren’t doing something else. So it can be expensive, it can be time-consuming.

So you need to first understand why are you doing this and will it actually help you. And then when you actually doing it, try to keep it as simple as possible. When you’re forecasting, you’re not only focusing for yourself, you’re focusing for a wider audience, like your employees, your management, any third-party investors that you getting involved with, and they all need to understand what you’re actually putting into numbers. So it’s not as difficult. So keep it simple, and keep it understandable. Throttle your growth, your projections, you need to maintain growth rates, as just as I said, you know, to get new fundings.

Use the data to show investors the path that will give them the 10 times return on investment. Again, you need to keep it realistic, but you need to be very optimistic. And not only for NASA, but for yourself as well. If you’re really optimistic, if you think that within this market within your business, you can achieve 10 times of what you normally think you should then put that at focus and work toward it. If  you’re just putting yourself some small figures and you just to be safe, then forecasting is not the right tool for you. Because forecasting is for you to push and achieve big numbers. So keep as high as possible. But we really realistic, you don’t want to be in a situation where you forecast something very aggressive, not able to achieve it. And obviously, you have bad reputation with everyone. So be realistic on this as well.

More Tips for Forecasting and Growth

With a small business and startups especially on a solid with expenses not revenue, because when you have expenses, you will know exactly what your cost is and how much your product costs should be. And then you can actually determine how much your products will sell for and you can understand your revenues will start simple start with expenses, because that’s something very easy to grasp of you will know exactly what your rent is, how many employees you need to pay, and how much your other expenses would be.

Check the key ratios like return on investment, always do this before actually going to someone going to an event investor. Because if you know your numbers and you know your percentage, then you can sell it a lot better, you can tell them exactly based on my numbers, this is what you’re gonna get back. Please, please make sure that you always know your data, you exactly know what you’ve put in the forecast and what all of the forecasting elements means.
If you’re starting with sales, you know how you came up to this sales figure. I’ve seen a lot of you know, business shows where they come up and forecast that they will be making a million but they have no idea on how they will be making this million and obviously they lose their investment. So always know where and how you where you’re projecting your figures.

More Tips for Forecasting and Growth
Forecasting for Startups

Forecasting for Startups

So for startups, it’s really good to have a collaborative forecasting. So get everyone involved. So not only just yourself, sitting down and looking at the numbers and looking at your sales and expenses, actually get other people involved in your business as well speak to employees see you know what day to day expenses there are so then you are actually capturing the overall expenses and not just expenses that you think if you have a sales team, get them involved and see what they think the realistic sales figures would look like and how much they can achieve and get marketing team involved and see you know what, what, what level of further marketing you can do to get further investment and then use That information, use that qualitative information to forecast and make your forecasting more realistic.

The assumptions, obviously, everything is based on assumptions, everything is based on the fact that it will happen in future, it hasn’t happened. things have happened in the past, based on that we are assuming things. So make sure you have a bit of flexibility on those assumptions to review all the data, do the market research, do a bit of testing, you know, do reviews, do polls, and see how actually your product is reliable to make those assumptions that you’re doing.

Don’t be too fixed, fixated on time. Sometimes you have an imagination that by six months, you will be there. If you not just see if it’s still realistic and push for the second forecast. But always compare what you forecasted what happened actually, and the difference between them, and Australia to close the difference by making drastic actions.

Imagine if you’re running a business and you don’t have a forecasting system or budgeting system, you’re doing your sales on daily basis, you’re doing your expenses, you will never know if you’re spending too much and if something is working for you or not. For example, if you if your marketing expenses, and you have a ratio that for every 50 pounds you spend on marketing, you will generate a 200 pound sale. So 150 pound extra. And you keep on doing this for a few months.
If you don’t have the figures in front of you, you will never know if you’re actually achieving this, maybe the marketing that you were using is actually not generating any sales, you’re just spending money on that marketing, maybe you needed to do a different marketing tactic. But if you have this on regular basis, and you’re checking your numbers on a weekly or monthly basis, you will see if that 50 pound is bringing the 150 extra ot not. And as soon as it’s not then you know that that’s not working and you can switch to something different. But if you keep on going without any understanding of the finances, then obviously you will lose out on a lot of money which you could have got and quite early. And for startups, cash is king so you need to make sure your your cash is well protected. refocused week forecast. And as I said, you know, brick forecast, monitor your sales as see the call to the feedback. And obviously, do not just fix yourself on the initial forecast you’ve done.

When you are growing the business you learn with the business and you become an expert of your own business. And when you’re an expert, you know your business a lot more than anyone else. And you need to do it all over again, just to make sure you’re doing the right thing. And be prepared to cut your losses always have a contingency plan, if something is not working, have the confidence enough to cut it out and try something different.

Common Forecasting Mistakes to Avoid

Some common mistakes to avoid with lack of historic data, or you know, previous forecasts, you will not be able to actually understand the trends. If you have you know, few months worth of data, a few years of data, then you know exactly what your business is doing in the marketplace. If you don’t have the historic data, then your focus might not be as accurate as you think. But what will happen is, you will now use qualitative information to make a forecast and next time probably next six months later, you will have that historic data because you spend the six months and then you will be able to make it more accurate. So historically, that’s quite important. But if you’re new, then it might be difficult. So there will be some tests and trials.

Go through the validation process, get everyone involved and validate your plans, validate your assumptions. And don’t be afraid of getting others opinions. Because if a person is on sale, they know how sales work. So be sure to take their understanding on it.

Creating Shared accountability for results gives and gives business partners full accountability for their activities. Now when you forecasting, you’re giving other people the accountability of their departments. So if it’s operation teams first like we have a target to reply to all of our clients within 24 hours on the chat. Now, we have forecasted that we will be meeting this target within when we initially started, we will meet this target within the first three months. If there was a delay, then we looked at the delay. Why was there a delay by when we are not able to reply within 24 hours and how we can fix it. We used the forecasting and we worked on it and we fixed it and then obviously we were able to continue with the plan and now the forecasting is working properly working perfectly but if we weren’t doing any of this, then we would never know if we were achieving our targets or not.

Always account for what-ifs because if you know COVID happened, and there could be things you know which you can never predict. So always have a bit of leniency on your forecasting on things that can happen. So make sure that You’re recounting everything. And if something does happen, you do not break down completely, you already had it in mind. Once is not enough, I keep on saying, you need to make sure the forecasting is always up to date and make it a habit make it a process.

Forecasting can sometimes lead to bad management behaviour. What that means is that if you give someone a forecasting, that this is how much sales you’re going to make, and they make that they meet their target, it gives them a comfort, then they will not probably push for further. So that’s why I keep on saying that if someone is meeting the target, then you’re probably focused too low, you need to encourage to do more. So but but if you’re not on top of it, then it can encourage bad behaviour. It only limits your focus on incremental changes. So, you will look at the small changes, but you will not look at the bigger picture. So if there was something that you could have done to make a big impact, forecasting will probably stop you doing that. So you need to again, keep on changing on it. It depends on trends very much. It will see what the market trends are going. But if a trend changes suddenly, then your forecasting becomes a bit of an obsolete so you need to be aware of all the changes that’s happening in the market.

Common Forecasting Mistakes to Avoid
More Common Forecasting Mistakes to Avoid

More Common Forecasting Mistakes to Avoid

Forecasting can sometimes lead to bad management behaviour. What that means is that if you give someone forecasting, that this is how much sales you’re going to make, and they make that they meet their target, it gives them comfort, then they will not probably push for further. So that’s why I keep on saying that if someone is meeting the target, then you’re probably focused too low, you need to encourage to do more. But if you’re not on top of it, then it can encourage bad behaviour.

It only limits your focus on incremental changes. So, you will look at the small changes, but you will not look at the bigger picture. So if there was something that you could have done to make a big impact, forecasting will probably stop you from doing that. So you need to again, keep on changing on it. It depends on trends very much. It will see what the market trends are going. But if a trend changes suddenly, then your forecasting becomes a bit obsolete so you need to be aware of all the changes that are happening in the market.

What a Perfect Forecast Looks Like?

So what is the perfect forecast looks like?

Again, it depends on your business model, but some for starting business, it’s better to go bottoms up because you’re looking at expenses and then you look after sales for already established business top down would be a better position because your costs are probably in control. And then you’re going through your sales in detail.
The returners met investment needs to be significant enough that it goes through the whole process with the consistency, so your investors out there and they know exactly that this, this business can bring this consistent income back. So make sure your forecast accommodates that. identify different users in the group and try to base the frequency of the focusing together design focusing process around the group’s on different departments. And just make sure that you’re accounting everything in together.

What a Perfect Forecast Looks Like?
Key Takeaways

Key Takeaways

Key Takeaways.

As I said, it started with expenses not revenue, especially in the stock position forecast revenue, using both conservative case and aggressive case. If you like most entrepreneurs, you will constantly fluctuate between both. But keep yourself motivated and help inspire. It’s a really optimistic stage.

Now the forecasting can always help you achieve wonders. So make sure you are using those wonders when you forecasting. Lastly, make sure that you are checking your key ratios for your projects.

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