Value of this Forecast
An Operating Plan Forecast can yield multiple benefits to the small business owner. First, the Forecast is a valuable planning tool. Second, when the planning phase has been completed, the Forecast becomes a key management tool in controlling the business operations to achieve the results planned for.
As a Planning Tool – The Operating Plan Forecast enables the owner to develop a “preview” of the amount of profit or loss, which can be expected to be generated each month, for each quarter, and for the business year – based on reasonable predictions of monthly levels of sales, costs, and expenses. By having a “preview” of future operations the owner can compare, ahead of time, the years expected profit or loss against profit goals and needs established for the business. If the results as forecasted are not satisfactory, there is time to identify what must be done in order to achieve satisfactory results for the year.
As a Control Tool- A completed Forecast enables the owner-manager to compare the figures for the actual results, as they become known, with the estimated or “targets” projected for that month. Where the results are out of line, steps can be taken to correct undesired deviations. By being able to see quickly where the trouble is, less time and money will be lost in getting back on track towards overall profit goals.
First Step Profit & Loss Statement — Where to Begin
First Step Profit & Loss Statement — Sample Worksheet
First Step Profit & Loss Statement — Handbook
First Step Profit & Loss Statement — Worksheet