How would you respond to a business owner who says, "I see no need in putting...

How would you respond to a business owner who says, "I see no need in putting together a financial plan for the future? All the numbers in the plan are just guesses anyway, no one knows what will happen for sure. I have a good idea what sales will be and beyond that, if sales are good, who needs a plan?"

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Expert Solution

In a business, forecasting the future numbers is not only beneficial to the owner of the business but also other stakeholders. A financial plan for the future helps to understand the requirement for debt, inventory and other expenses.

In case the sales are good you should have enough resources to manage them. Also, if the sales are not that great you need to have enough reserves in cash and other liquid assets to fulfill your current liability obligations.

Hence, it is important to put together financial plan for the future. The numbers are not just gusses of the future sales and expenses but a cqlculated figure based on the current econmy and business cycle plus the past trend. We cannot be 100% certain by the forecast but can atleast have a picture of the future and plan accordingly. Hence, you need a plan even if sales are good.

Do let me know in the comment section in case of any doubt.

jeff jeffy answered 1 year ago

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