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Financial Projections: Key To Long-Term Success

The past few years has reminded us that things will inevitably come up that are out of our control. Here are some reasons why financial projections are more important now than ever before.
Financial Projections



It’s not a secret that a financial projection is a crucial piece of the puzzle, whether you’re talking to investors about your company or detailing a quarterly plan. With the entrance of Covid-19 into the business world, financial projections have taken on a bigger role with more importance than could have been predicted.

Here are some reasons why financial projections matter even more than they did before.

Financial projections help to base your opinions on reality

Opinions, perceptions, and feelings about company finances and the economy, in general, have shifted since the beginning of the year. While some leaders remain optimistic, others have a more negative view of the future. It’s a slippery slope either way, especially when you don’t have data as a foundation to build from. A thoughtful and detailed financial forecast can help ground your feelings and give you a realistic springboard for your next moves.

Help you return your company to normal with financial projections

We have all heard the phrase “new normal” thrown around Zoom calls and late-night emails, and leaders worldwide are still navigating the impact that COVID-19 has had on business. When an in-house team or financial planner can produce a series of forecasts, it can help top executives visualize how the company will “return to normal” in the future. It’s easier to figure out your next steps when you have all the necessary information.

Allow for shifts in your company plans

When the pandemic first hit, leaders scrambled to make their teams remote, and business owners tried to hold on until the waters calmed. When everyone imagined what Q3 would look like, a pandemic was probably not on the list of possibilities. Great leaders are known for adaptability, but when you align your actions with a solid financial forecast, it helps make more sense of everything that might be in your path ahead.

Make room for meaningful conversations

Financial projections are based on facts and hard numbers but are filled with what-ifs and assumptions. During uncertainty and change, a solid financial projection customized to your company’s nature can aid leaders with decision-making. It’s easier to talk about how the pandemic might affect the market, change your competitors, or muddy the waters for upcoming plans when you can make all these comparisons and contrasts a part of what will lead your company forward.

Keep the focus on thinking long-term

A financial projection is what you expect to happen based on your current and probable realities. While the pandemic has drastically changed these realities for many businesses, it’s crucial to continue forecasting so your company remains focused on long-term strategy. Covid-19 has lasted longer than many once thought, but what remains true is that what we do today will affect next month, and how we project next month will go will affect what we’ll do today.

Help with goal setting and outcomes

2020 has reminded us that things out of our control will inevitably arise. A professional financial projection can be a good measure of how your company is performing and what outcomes are being attained, no matter how dire or wonderful the current circumstances have turned out to be. It can help show your team how what they’re working on this week is connected to future outcomes.

At Notion CFO and Advisors, we help our clients grow their businesses through strategic management and oversight of all financial aspects. As an outsourced CFO and accounting firm, we can help with financial projections so that your company remains in good financial health and is prepared for what might be ahead. Contact us for a free economic assessment!

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