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Forecasting More Profit Through Valuable Discussions

Christian Wielage
Posted by Christian Wielage on Oct 19, 2022 12:43:23 PM

One way to truly become a Trusted Business Advisor is by offering regular budgeting and forecasting processes, and getting started is easier than you think!

This capstone service adds exponentially more value to your traditional offerings because it translates the client’s numbers into discussion points, ultimately leading to better decisions. This may sound dramatic or unattainable to those who take great pride in their services but don't offer budgeting and forecasting to their clients. These advisors frequently believe that this kind of service is complicated and only appropriate for businesses with high revenue, but this is not the case.

Which clients can benefit from budgeting and forecasting advisory?

While there are some mature micro-businesses where a budgeting and forecasting cadence will not add much value, once a business crosses over $500k in revenue, they typically have dozens of sources/uses of cash. A simple forecasting cadence can give them cash flow clarity and only takes about 20 additional minutes a month. You don’t need to get down in the weeds by building complicated revenue/cost models or forecast AR individually for critical customers.

By giving the forecast a simple spin each month, you create the opportunity to have a quick conversation and provide enormous value. These brief conversations, when repeated month after month, stir up discussions that never would happen otherwise. Along the way, you learn much more about your client’s business and can provide actionable recommendations in the context of the forecast.

Establish a regular forecasting cadence with your clients

The massive side benefit of regularly forecasting is that your client is ready for the unexpected. For example, when a critical piece of equipment breaks down, you can pull out the forecast and help the business owner decide if they can afford to pay cash for a used piece of equipment or whether to explore long-term financing options. If the business owner needs to run to the bank, there's no need to scramble to prepare projections. With the regular forecasting procedure and how swiftly and effortlessly your client is able to provide information, your client offers the banker trust. You might even impress the bankers and get a few referrals!

Regularly viewing budget/forecast vs. actual reports will assist in the continuous refinement of the forecast. This practice will also stir-up conversations that wouldn’t happen otherwise, “tell me why your gross margin is so much less than you anticipated. Do you expect this to be permanent?” You will gain insights from your exposure to a variety of firms that an entrepreneur bogged down in daily issues might not have. This intrinsically increases your effectiveness and value to all your clients. 

Elevate your own forecasting skillset

You can gain a lot of insight into your client's operations and formulate sound recommendations by merely looking at historical data, but consistently predicting the future reveals far more. Because you are attempting to determine "what are we going to do next," the monthly forecasting process naturally extracts those actionable recommendations. In the eyes of the client, this elevates you from "accountant" to "Trusted Business Advisor."

If you are dealing with larger, more complex businesses, you might need to build a complicated revenue model or detailed payroll schedules, and it will certainly take more than 20 minutes to spin each month. The good news is that these clients can usually afford to pay more. Don’t assume your larger clients have an adequate budgeting and forecasting cadence just because they have a CFO. Once you are confident in your ability to offer these services, you will become effective at asking all the right questions to see if you can help without offending anyone.

Start simple and with the right clients

The most common mistake we see with advisors trying to build fractional CFO services into their practice is that they start with their largest, most complicated clients. But this is like pushing off down a double black diamond on your first-time skiing; you might make it, but it probably isn’t going to be fun. If your client's need is immediate and you are uncomfortable with your current skill level, consider paying for additional consulting services from whatever solution you choose. To get the most bang for your buck, make sure they are teaching you how to use the solution along the way. You will sharpen your own skills and lessen the chance you'll need to hire them again in the future.

By starting simple with smaller clients, you can start adding value immediately while getting familiar with whatever application you choose. It's best to start with clients who are open to change and have a positive attitude because they will need to put in the effort to make the process successful. Consider working with someone who will work with you as you are learning. After gaining experience, you will be able to handle your more complex, larger customers with sophisticated needs. And in time, you can learn to tame even the most stubborn curmudgeon!


Learn more about how to start offering forecasting and budgeting services to your clients and how PlanGuru can help you get started.

Topics: Financial Advisory


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