How to Succeed in Business

Success in business depends on more than profits. It also depends on planning positive liquidity and cash flow which is ultimately what success depends on.

Starting and Staying Successful

The two golden rules for success in business begins with profitably offering goods or services that people will want to buy at prices they are prepared to pay, the second is to never run out of cash.

In business, cash is king: Profits are no guarantee of survival if a business runs out of cash and credit: The overwhelming majority of companies that go into administration or liquidation do so while still showing retained profits in the balance sheet.

Forecasting and Planning Objectives

Every business must plan ahead, for liquidity and cash flow as well as for profits. That calls for accurate forecasting based upon getting spending right. Above all your cash flow forecasts must show sufficient cash in hand every month to pay the bills on time.

Profits are essential too but they do not guarantee solvency. How well the company's cash is managed is what matters most of all. Excessive investment in illiquid fixed assets, too many goods for sale sitting on the shelf or accounts receivable taking longer than they should to pay need to be avoided.

What your forecasts need to tell you is that targets for sales, margins, overheads and investment are affordable. That takes efficiently collecting cash flow from accounts receivable, reasonable commercial credit and crucially; adequate financing.

Raising the latter will depend on what your forecast balance sheet is telling the bank or other senior creditor.

Forecasting Working Capital and Liquidity

Cash flow comes from a company's liquidity. That represents a surplus of cash plus cash convertible assets such as accounts receivable and stock less current liabilities i.e. debts payable within twelve months. 

Described as net current assets they are also known as working capital. This appears in the balance sheet forecast, one of many Figurewizard produces just from your own projected figures.

This is the crucial measure of a company's ability to pay its way. If your balance sheet forecast is showing a deficit by the end of the financial year, obtaining finance to cover the occassional month's shortfall will become very difficult.

Forecasting Profits and Cash Flow

Figurewizard forecasts are produced in a simple and straightforward yet comprehensive fashion. All that is needed from you are your forecast sales, margins, overheads, asset purchases and sales and simple cash ratios for one, two or three years.

From this our system produces all of the forecasts for profits, cash flows, balance sheets, analysis of overheads, assets and liabilities, VAT transactions and corporation tax –  essential elements for successful planning.

All entries with the sole exception of company cars are entered exclusive of VAT as, like everything else this is automatically calculated.

Assessing Figurewizard

Interactive working examples of the forecasts can be viewed by going to "sample forecasts" or by following "useful links" below. Changes can be made either by selecting "edit this forecast" or better still by using our unique What-If planner.

How Much Does Figurewizard Cost?

The annual subscription of UK £30 (approx. US$32 or €25) enables you to save up to a hundred full sets of forecasts.

All saved forecasts can be retrieved for updating and exported to excel for formatting and printing.

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