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  • Leonard Brecken

Forecasting is Core for an Owner's Personal Planning

It a wonder how personal financial planning occurs with any accuracy for business owners who do so without even forecasting their business. Since an business owners largest asset is the business they own and in most cases its their primary income how can one plan for such things are retirement if one doesn't even know what their income is tomorrow, this year, next or the in 3 years? In order to create a plan to save for future needs a business owner must start with some forecast of their business to determine how much can be saved in the future. Most business owners "wing it" operating day to day with no planning whatsoever nor any forecasting of what they will earn. Most small business' fail to maximize the value of their business as a result. As a business owner ask yourself why every Fortune 1000 company does budgeting and forecasting for their company. It is probably why they are Fortune 1000 companies not still small companies-- its a basic recipe for success. Most small business owners plan on selling their business as they get close to retirement yet they do so with no plan in place to maximize its value nor seek advice on how to do it except when they are about to sell it. There is more that goes into a business's value than just growing revenues such as things like margins matter, the linearity of growth, revenue visibility, return metrics on investments made, cash flow cycle etc. All of which are look at over periods of time not just the year a company gets sold. Yet all a business owner focuses is trying to grow revenues.

My point is that by doing forecasting & planning for a business one can maximize profits and thus maximize a businesses value. In the end by doing so the business owners personal finances will benefit and planning for such things as retirement would be more accurate. And probably more easily achieved.

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