Welcome back to forecast month!
We’re back with another exciting episode of our forecast journey. Last time, we laid down the foundation for why forecasting is your ticket to a successful future. Today, let’s roll up our sleeves and dive into the “how” of forecasting.
Recap: Why Forecasting is Your Game-Changer
Remember why having a forecast is the a secret weapon in your entrepreneur toolkit? It’s all about having the upper hand when it’s tax time. No more April 15th shocks with a monstrous tax bill waiting for you. With a forecast, you’re ready, you’re armed, and you’re in control.
Where the Numbers Hide and How to Catch ‘Em
Start with the most important number: the amount of money you’ve made this year.
It’s how much you collected from your customers, but more importantly, the total estimated amount you’re going to collect from your customers by the end of the year.
Now, don’t sweat it if you’re more “shoebox receipts” than “meticulous spreadsheets.”
Let’s kick things off with an easy approach.
No matter your business flavor, if you’ve made money this year, you’ve been collecting cash. Whether it’s neatly tracked in QuickBooks, Xero, or dancing loosely in your Excel file, it’s time to summon those numbers. And if you’re still juggling personal and business funds in one account (seriously, read my previous blog post on why that’s a no-no), time for a friendly separation.
Say you’re rocking PayPal, Square, or Stripe for payments. Guess what? They’ve been keeping score for you! So, even if you’re not a spreadsheet guru, you can tally up those deposits in the app and differentiate your clients’ deposits from other unrelated deposits.
Turning Numbers into Magic: The Forecast Spell
Once you have this, it’s really very simple: you want to add them all up.
Ready for the magic?
Let’s morph those numbers into a forecast. Imagine, for a moment, my fictional business has a $90,000 total this year, averaging $10,000 a month. With three months left, if everything remains constant—no spontaneous holidays, no sudden holiday sales spike/drop—I’m looking at three more months of $10,000 for the year.
(Quick note: This holiday twist mainly concerns coaches. If your gig involves billing for your time—business coaching, life coaching, or any coaching, really—hang tight for the next installment where I unveil these seasonal riddles.)
Wait, That’s It?
You might be thinking, “Hold up, this can’t be this simple!”
Is this oversimplified? Absolutely.
But hear me out: Our goal now is only a ballpark forecast for year-end.
This is your starting point, your compass, your North Star for your financial voyage.
It’s the way that we make sure that we’re in the right ballpark (even in millions of dollars).
It’s our sanity check to bring our heads out of the clouds when we get lost in our daydreams.
Your action item this week: set aside half an hour. Grab those bank statements, corral those deposits and checks. Calculate how much you’ve hauled in from January to September. You don’t have to break it down by month, just find out the total.
And stay tuned for next week when we delve even deeper into the how-to’s of forecasting.