Small to mid-sized businesses (SMBs) often fail to hit their own growth targets and other financial goals, which can lead to poor decision-making, missed opportunities to secure capital, and other negative repercussions. The good news is that if your SMB is falling short, you can still change your existing approach to achieve your most critical objectives.

While there are many different reasons for this, chances are good that many of these businesses did not have the right financial metrics and controls in place to drive their business on a daily, monthly, or quarterly basis. Without the right projections to monitor, it can be hard for any SMB to keep the doors open—much less grow the business.

To be fair, SMBs do not choose to miss their projections and financial targets. Instead, it is more likely that many have not implemented the right projections – if they have developed any at all. SMB owners may not have the experience, technology, data, employees, or other resources they need to create and track the business against important financial metrics.

Time is also a real issue. Life as an SMB is busy, as you may very well know: Owners and employees are often forced to wear many hats to put out fires, react to new priorities, and support the business every day. This inevitably pushes financial planning to a “nice-to-have” item on a to-do list that is already too long.

What are Financial Projections and Why Do They Matter?

Financial projections are best guess estimates of a company’s revenues and expenditures at a specific point in the future. They are critical for any company, but especially your SMB because they are an effective way to show how your business performs in the face of market opportunities, threats, and other conditions. Financial projections are also an important way to determine a company’s overall valuation.

When done well, financial projections can help you forecast the predicted growth of your business and understand your organization’s overall health and success. Financial projections should be woven into a larger business plan to inform the best decisions possible related to capital, production, expansion, and other strategies.

Examples of the most common financial projections include:

• Sales forecasts
• Expense budgets and reports
• Break-even analyses
• Cash return projections
• Profit reinvestment plans
• Other custom financial estimates

The Right Approach

But if you are currently not using these kinds of financial projections, what can you do to overcome existing obstacles and take advantage of all that they have to offer?

While there is no one-size-fits-all solution, best practices typically involve the improvement of your use of technology to gain real-time visibility into critical data and develop better business planning processes. Such an approach can become a valuable advantage in helping your SMB increase revenues, strengthen your bottom line and improve your ability to achieve your most important goals.

Next Step

To learn more, download the full eBook, “Three Ways SMBs Miss Growth Projections” now.