Why December is the perfect time to forecast for 2025
As the calendar ticks rapidly towards the end of 2024, many are turning their attention to financial forecasting for 2025 and beyond.
A bit like the proverbial chicken and egg… what comes first, the strategy or the financial goal?
The financial goal of course. You have to have a financial goal or two before you decide what strategies are needed to achieve them.
From my experience of chatting to business leaders, many don’t have a financial forecast (burying their head in a bucket of sand) and when they get started, they attempt to get everything to five decimal places.
It’s better to have a forecast that is approximately right rather than accurately wrong.
December provides a unique and strategic opportunity for businesses to reflect, plan, and set the stage for the year ahead. Among the most critical tasks is producing a financial forecast – a forward-looking estimate of your revenue, expenses, profit and cash flow. Here’s why NOW is the ideal month to tackle this essential planning activity:
- Year-end data is fresh and comprehensive
By now, you have nearly a full year of financial data at your disposal. This data offers a robust foundation for identifying trends, evaluating performance, and making informed projections. Analysing how your business has performed over the past year enables you to pinpoint areas of strength and opportunities for improvement. How do you bridge from 2024 results to 2025 targets?
- Align with goal-setting for the New Year
December is usually a time for reflection and future goal-setting. Creating a financial forecast allows you to align your business’s financial goals with the broader strategic objectives and your vision. Whether you’re planning to expand, invest in marketing, technology and people, or improve profitability, a detailed forecast ensures that your financial plans are realistic and actionable.
- Stay ahead of competitors
Businesses that plan ahead often outpace competitors who operate reactively. By forecasting in December, you can anticipate market conditions, plan for seasonal fluctuations, and prepare for potential challenges. It also positions you to seize new opportunities, such as wise investment or expanding into untapped markets.
- Aligns your team
Sharing a clear financial vision for the upcoming year and engaging your team so they can share how they will help deliver it, energises your team and gets them all aligned. A well-thought-out forecast provides transparency, inspires confidence, and gives your employees a sense of purpose and optimism as they head into the New Year.
- Helps identify pinch-points
A robust forecast, that is reviewed and updated regularly enables you to monitor if you are on track each month v target. It enables you to tweak your strategies to stay on track or get back on track as each month passes so you can maximise your ability to hit your year end goals. A good forecast will show you where, when and why you have future pinch points, that enables you to take evasive action.
December isn’t just the end of the calendar year – it’s a launching pad for future business success. By taking the time to create a robust financial forecast, you equip yourself and your business with a roadmap to navigate the challenges and opportunities of the coming year and beyond.
Every monthly meeting I hold with every client, has a section to review financial performance v target and then update the strategies to ensure quarterly and annual goals are met.
If you don’t have a robust forecast, you are setting yourself up to fail. Speak to your accountant today to get started. If they cannot or won’t help, change accountants before it is too late.
Are you ready to stop dithering and unlock your full potential? Curious about how I can help? Book a complimentary discovery 30 minute call now and let’s explore your goals together.
