Three Decisions, No Forecasts

I was reviewing quarterly reports with a client recently, and they couldn't figure out why their cash was so tight.

Revenue was up. Sales were growing.

But somehow they were in worse shape than the quarter before.

When we dug into it, we found the problem.

They'd made three major decisions in the past 90 days - hired two people, expanded into a new product line, and increased ad spend.

Not one of those decisions had been forecasted for impact on cash flow.

They just made them. Because it seemed like the right move at the time.

And then they were scrambling to figure out how to cover payroll.

This isn't unusual.

We talk to ecommerce business owners about whether they forecast the financial impacts before making important decisions.

Most of you don't.

You make a decision without forecasting what it'll do to your cash flow, and suddenly you're in a cash crunch you didn't see coming.

You don't think through how a choice will impact operations, so you end up scrambling to fix problems you could've avoided.

You don't consider profitability, so you're growing revenue while losing money on every sale.

You're making big moves based on gut feel, not data.

And then you're surprised when things don't work out the way you expected.

Before you make a major decision, you need to run the numbers.

Forecast what it'll do to your revenue, profit, operations, and cash flow.

Make sure you can actually afford the decision you're about to make.

Are you forecasting the impact of your decisions before you make them?

Are you diving deep enough?

Take the Ecommerce Business Performance Assessment and find out.

Then reach out and let us help you make a plan.

Cyndi