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Business
Forecasting
Growth
Forecasting is the secret weapon most small businesses don’t realise they need. While it might feel overwhelming or like a job for another day, having a solid, reliable forecast is the difference between guessing your way forward and making confident decisions that drive growth.
At Crisp, we’ve created a simple yet powerful system to make forecasting easier and less daunting. Our 13-12-5 Forecasting System gives you a clear roadmap, helping you stay on top of your cash flow, plan for the year ahead, and think big with a five-year strategy. Let’s dive into how it all works.
At Crisp, we believe businesses should spend more time looking ahead rather than backwards when it comes to their numbers. Unfortunately, most small businesses don’t. The truth is, very few have forecasts they can fully trust and rely on.
Why? Because Forecasting is tricky – part science, part art. It can be hard to know where to start, and when you're a business owner wearing 100 hats, it's no surprise forecasting doesn’t make it to the top of the to-do list. But that's a massive missed opportunity. Forecasting empowers better decision-making, helps you mitigate risk, and becomes the roadmap that guides you to your goals.
Let’s break down the process with the 13-12-5 Cash Flow System we use at Crisp to keep everything in balance:
When cash runs out, the business grinds to a halt. This is why a 13-week rolling cash flow forecast is absolutely critical. It’s simple to prepare because it’s based on actual invoices and bills rather than guesswork. It shows exactly what cash will be coming in and out of your account over the next 90 days, so you’re never caught off guard.
Review it every week to ensure accuracy, adjust for any new developments, and roll it forward another week. In especially tight times, this forecast can be adjusted to daily intervals to keep an even closer eye on the cash.
Your 12-month budget is your annual roadmap, prepared as you approach the new financial year. The important distinction here is that a budget is fixed, whereas a forecast is flexible and continuously updated.
Think of it like this: the budget is like the printed directions to your destination, while the forecast is your sat-nav that updates with real-time traffic. Your budget sets the expectations for the year ahead, but your forecast adapts to where you’re actually headed.
Each quarter, we reassess the 12-month forecast based on fresh data. This gives us two important views: the original budget and the updated forecast. Comparing the two lets you see how close you are to your targets and what adjustments need to be made to keep you on track.
This is where things get interesting. The 5-year model looks at the long-term horizon, testing different scenarios and mapping out potential future outcomes. It's tricky to put together, but invaluable if you're planning any major moves like attracting investors or going into mergers and acquisitions.
Running through different scenarios – like what happens if you double your client acquisition cost or increase your churn rate – is vital to stress-test your strategy and prepare for whatever the future holds.
Forecasting can feel like a beast, but it doesn’t need to be. Here are a few quick tips:
At the end of the day, success is all about looking forward. With the right help and tools, forecasting goes from being a chore to a game-changer. It’s like having a sneak peek into the future of your business, helping you make better decisions today to create the business you want tomorrow.