Profit Forecasting – Bright ideas with solid foundations

Profit forecasting. The image depicts three banknotes and seven coins.

Threatened success

A passionate and creative serial entrepreneur saw her businesses in leisure pursuits and property development hit by recession as cash flow dried up. Without effective profit forecasting, she realised that while her intuition had successfully driven expansion, growth was haphazard and erratic.

Like many similar companies, her financial records were produced to prepare VAT returns, accounts were for compliance. There was no underlying strategy or management information to control and review performance. Nor was there any advice as to what the figures meant.

Turning the ebb tide

When Finton Doyle were asked to step in as accountants ready to work as a constant partner on the nitty-gritty of daily business life, we quickly drew up an action plan to return each enterprise to safe health.

New models for success

Our first move was to develop a set of models designed to extract a thorough understanding of the financial dynamics involved. From this, profit margins, cash flow and investment requirements soon became clear. Secondly, we introduced systems bespoke to each business to continually measure financial performance accurately.

Targets and goals for recovery

Lastly, we set targets carefully created to manage working capital and drive profitability. We also took part in monthly meetings to monitor and then evaluate the financial health of each project. Crucially, the agreed business goals were set down as part of a formalised business plan. Recovery is now well under way.

Key actions

  1. Design of management reporting systems
  2. Implemented short-term cash and profit forecasting
  3. Helped with target-setting and financial planning

Key results

1. Better flow of management information gives greater control of finances
2. Able to spot potential shortfalls in cashflow and take corrective action
3. Growth is no longer haphazard

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