How to Align Cash Flow Forecast With Your Business Vision StatementIan McManus
A Cash flow forecast is similar to a financial statement but as the name suggests, it is a forecast of your business’ future cash flow capabilities. It can assist you and your team to determine whether or not your business is ready to proceed with any financial commitment for the business.
There are many ways a cashflow forecast can help businesses like yours as it:
- Helps you to determine whether or not your business plan has materialized as predicted.
- Helps you anticipate any possible business downturn
- Assists you in identifying problems early, giving you time to develop a contingency plan
- Can help you to spot certain periods of time when your business may falter
Constructing an accurate forecast involves many elements. Among theses one of the most important elements is your own Business Vision Statement.
What is your Business Vision Statement?
A Business Vision Statement is a clear, concise statement that outlines the direction you want your business to go. By creating a business vision statement, it enables you and your employees to clearly see and work towards your stated business goal. Each business vision statement is specific and tailored according to your type of business and what you want to achieve.
In many ways, a cash flow forecast and a business vision statement are similar:
- Both are seen as goals: A cash flow forecast on its own will serve as a short-term goal; A business vision statement can either be long term or permanent
- Both serve as a motivational tool. A business vision statement can inspire you and your employees to strive towards the business goal. The cash flow forecast can propel you and your workers to take action especially during a ‘low period’.
- Both are used to assess your business. A business vision statement helps you determine whether you and your employees are working toward the ultimate goal or whether you have strayed from the path. A cash flow forecast helps you to see whether or not the business plan has materialized as projected.
- Both need unity within your organization in order to be achieved. The owner as well as his workforce and managers are dependent on each other. The business owner relies on his workers to help achieve the goal; and the staff needs the owner to have both the plans and vision.
- Both need discipline and meticulous organization. In order for you to construct an accurate cash flow forecast, you will need accurate statements regarding bills and payments as these serve as the foundation of your cash flow projection. Your current statements should be constantly up-to-date, reviewed and analyzed. In order for this to be achieved, you need discipline and honesty within your workforce.
In order for you to decide what it is you want to accomplish and to formulate a comprehensive business vision statement; you need to be clear and concise so that the direction and goals of the business are easily understood.