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Annual Business Forecast

Annual Business Forecast. t2a. Aims of the Annual Business Forecast. TO FORECAST FUTURE FINANCIAL AND OPERATIONAL REQUIREMENTS OF THE SETTING TO HELP US PLAN AND MANAGE EFFECTIVELY TO SUPPORT LONG TERM SUSTAINABILITY. Forecasting.

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Annual Business Forecast

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  1. Annual Business Forecast t2a

  2. Aims of the Annual Business Forecast • TO FORECAST FUTURE FINANCIAL AND OPERATIONAL REQUIREMENTS OF THE SETTING • TO HELP US PLAN AND MANAGE EFFECTIVELY • TO SUPPORT LONG TERM SUSTAINABILITY

  3. Forecasting A key aspect to support planning is forecasting future activity Forecasting ...... • INFORMS YOUR PLANS • INFORMS PARTNERS AND FUNDERS • HELPS SECURE FUTURE RESOURCES FORECASTING IS NOT A PRECISE ART! • FORECASTED FIGURES NEED…….. • Due consideration • Research • FORECASTING HELPS UNDERSTAND YOUR FINANCES AND BUSINESS MORE COMPLETELY • FORECASTING REQUIRES: • “Assumptions” which have been made in justifying figures • “Rationale” used to estimate figures

  4. Forecast layout There should be …………. • A column for each service offered if you are able to split them up • We need to understand how each service performs financially • Details of income • Planned income over the next year • Each source of income identified • Details of expenditure • Planned expenditure over the next year • Category of expenditure

  5. Completing the forecast • STEP 1 – FORECAST ALL EXPENDITURE FOR EACH SERVICE • STEP 2 – FORECAST INCOME GENERATED FROM SALES TO PARENTS OR THE PUBLIC • Childcare • Community café • Room hire, T-shirt sales etc.

  6. Forecasting Income When forecasting income from services which are charged to parents or the public, the following guidelines may be helpful: • Research the likely income levels based on take up of services, or in other words “sales” • The estimate of income should be based on reasonable assessment of the level of use of services over the coming year • The estimate should relate directly to your pricing policy for the service you are delivering. • The reasons as to “why” the income will be greater or less that previous years are important to state • Clearly set out your “rationale” and your “assumptions” for the forecast you develop. This will give you and your partners the confidence of the financial success to the setting. When forecasting income from other sources: • Gain a commitment from funders in writing detailing the funding they will give and the timescale it applies to • Clearly set out your “rationale” and your “assumptions for the forecast you develop. This will give you and your funders the confidence of the financial success to the setting.

  7. Forecasting Expenditure When forecasting expenditure for each core service the following guidelines may be helpful: • Research the likely expenditure levels by discussing with suppliers • The estimate of expenditures should be based on reasonable assessment of the level of spending in previous years, or by comparison to similar settings operating locally. • Clear staffing policies should be set and wage rates fixed enabling accurate staffing cost estimates. • Clearly set out your “rationale” and your “assumptions” for the forecast you develop. This will give you and your partners the confidence of the financial success of the setting

  8. Example- Annual Financial Forecast Procedure

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