This is the first of a series of articles I wrote about Murray Goulburn on behalf of the Association of Virtual CFOs and which were published by Smart Company.
At the time I was astounded by the scale of Murray Goulburn’s miss, and their subsequent decision to make the farmer suppliers wear the brunt of what was a monumental head office stuff up.
I also knew there would be a lot more to come on this story.
In the end, I wrote another couple of articles/blogs dealing with different aspects and lessons as the story unfolded.
For business owners, in this article, you will learn how to:
- Construct a robust budget.
- Use as your starting point your current position, key industry and economic drivers.
- Gauge the scale of the task to shift from your current to your planned position.
- Track key business drivers throughout the year to understand the likelihood of meeting budget.
- Decide when your budget needs to be revised.
The key lesson is that the point of a forecast is not to be “right”.
The point of a forecast is to reflect your business plan, so that when things don’t go as expected you can ask the following questions:
- Have we taken all the actions required by our business plan to achieve our forecast?
- If not, why not? When will those actions be completed?
- If we have, then what has changed in the market for our goods/services that we did not anticipate?
- What, if any, action do we need to take as a result of the answers to these questions?
To grow with confidence you need a good forecast.
The three-way financial models that we build at Pro Veritate will help you understand the timing and amount of capital needed by your business to support your plan.
If you are a growing business you should Contact Us. We can help.
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