Forecasting is fundamental to all businesses, whatever the size. There are key times when you need to anticipate future developments, both short-term and longer-term. For example, when you set up your business, when you need financing and when working out how much you will earn.
Forecasts should not be one-off paper exercises, but a dynamic part of your business strategy. You should review your forecasts regularly and update them with actual results. That way you can see how things turned out compared to your forecast, and adjust your activity accordingly. This will enable you to:
Short-term forecasts can look at the next 12 months, the next six months or even the next month.
To prepare a short-term forecast look at:
You'll also need to forecast:
Each of these can have a huge impact on your ability to continue in business.
How often you review and update your short-term forecast will depend on what is happening in your business:
Long-term forecasting looks at your company's strategy and figures over the next three to five years and is especially useful when:
As well as taking into account all the things you would look at in short-term forecasting, long-term forecasting will include an element of brainstorming:
For decision-making to go ahead, any investment or major change in your business should be preceded by a feasibility study, both financial and non-financial. A feasibility study looks at:
A financial feasibility study details:
Ideally, your long-term forecasts will inform your short-term forecasts, which will in turn inform your annual budget. Forecasting and monitoring will help you organise incentives for your staff - for example, if you set targets and they exceed them, you can reward them with bonuses. In this way, you can all work towards your company's ultimate goals.
Back to top
Lloyds TSB Bank plc and Lloyds TSB Scotland plc are authorised and regulated by the Financial Services Authority under numbers 119278 and 191240 respectively.
Licensed under the Consumer Credit Act 1974 under registration numbers 0004685 and 0198797 respectively. We subscribe to The Lending Code; copies of the Code can be obtained from www.lendingstandardsboard.org.uk
Both companies are covered by the Financial Services Compensation Scheme and the Financial Ombudsman Service. (Please note that due to the schemes' eligibility criteria not all Lloyds TSB Commercial Banking customers will be covered by these schemes.)
Factoring, Invoice Discounting, Hire Purchase and Leasing facilities are provided by Lloyds TSB Commercial Finance. When using these products and services your agreement will be with the Lloyds Banking Group whose terms and conditions will apply. Lloyds TSB Commercial Finance is a trading name of Lloyds TSB Commercial Finance Limited.
The Lloyds Banking Group includes Lloyds TSB Bank plc and a number of other companies using brands including Lloyds TSB, Halifax and Bank of Scotland, and their associated companies.
Calls may be monitored or recorded in case we need to check we have carried out your instructions correctly and to help improve our quality of service. We accept calls via Text Relay.
While all reasonable care has been taken to ensure that the information in this website is accurate, no liability is accepted by Lloyds TSB for any loss or damage caused to any person relying on any statement or omission in the content of this website. The content of this website is provided for information only and should not be relied on as offering guidance for any set of circumstances and specific guidance should always be sought in each instance.