Change Your Forecasting Method to go from Business Failure to Sweet Success

By Matthew Garrett

Matthew Garrett delivers another key component of financial success for struggling entrepreneurs, again published in Forbes. We felt it delivers important simplicity and content to those great Catholic business warriors who nonetheless lack a sufficient, strong anchor in financial understanding. Read on! -ed.

Every business starts out with optimistic spreadsheet projections of profit and success.  Unfortunately, according to a 2012 University of Tennessee study, more than half of these businesses will fail within the first four years of operation. Of those failed businesses, 72 percent say they went out of business because they ran out of cash.  Tragically, 77 percent were started with the owner’s life savings.

Worse, many of these businesses failed after hitting — yes, you read that correctly – hitting or in some cases exceeding their forecasted sales projections. 

So, why do “successful” businesses fail?

I met a woman last week who started her business four years ago.  We will call it “Brand A Products.” She is the epitome of sales success; having grown revenues by more than 100 percent per year, and, in 2012, she topped the $1 million mark in sales. She is on track to double revenues again this year, but is still not making money. Worse yet, she doesn’t know why and is running out of cash. To save her business she was looking to sell 30 percent of her Company to investors and raise $450,000.  Without the cash, the business will close in three months 

Brand A forecasted profits using the standard spreadsheet. She blew away her sales projections. Unfortunately, she forecasted profits based on sales and … Read more>>


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