What is a Prediction?

Dec 11, 2023 by Roger Scherping




ProjectionSmart helps your clients see their future by turning their backwards-looking financial statements into a forward-looking prediction.

ProjectionSmart makes it very quick and simple for you to help your clients see their financial future. But why do you want to help your clients see their future?


Benefits of seeing the future

With a solid understanding of their future, your clients will better understand the numbers of their business, have a 12-month financial plan to follow, and have the peace of mind that comes from knowing where their business is going.

As their trusted financial advisor, you will have happier clients, a better differentiated business, and more revenue. Sound good to you? There is a huge opportunity for you here because not many trusted financial advisors go beyond preparing the monthly financial statements nor offer any type of forward-looking advice.

But what do we mean by a prediction?


What the heck is a prediction?

You’ve heard of a financial projection or a forecast. What is the difference? Oracle NetSuite says:

”A financial forecast is an estimate of future financial outcomes for a company. It predicts what will likely happen in your company’s future based on things that have happened in the past.

Financial projections explore different scenarios to reveal a variety of possible business outcomes, should your company choose to pursue them, or if the assumed circumstances become reality—or what your company hopes will happen in the future.”

Confusing? Does the difference really matter?

At ProjectionSmart, we prefer the term prediction.
 

  • A prediction can project what will happen if the company remains on its current path. It can also compare the current path to more aggressive or conservative scenario.
  • A prediction can also analyze several different possible courses of action, like a new product or production line or an acquisition. Then it can quantitatively project which one makes the most sense financially.
  • With ProjectionSmart, a prediction can be done in just a few minutes. This is a low-effort, high-reward opportunity.
  • Does “strategic planning” sound intimidating? Does it sound like something that you couldn’t possible do yourself? Again, we prefer “prediction,” and we make the process simple enough that anyone can do it.
  • There are lots of online “templates” that you can download. Most require a level of understanding of accounting that is beyond the average small business owner. But there is no need to use a complicated template when you can do a prediction using ProjectionSmart’s  simple online tool.
  • There are also lots of online financial planning tools, but they are all aimed at sophisticated financial managers. ProjectionSmart is the only tool that was created for the small business owner and tailored to their level of financial acumen.
  • We use only high-level data, the rolled up balance sheet and income statement, because we are doing a form of modeling. This is not a detailed financial analysis tool. It’s a high-level decision making tool. This approach appeals to the small business owner who prefers to works best at the higher level and wants to avoid complexity.
  • We rely on history for comparison purposes. Also, since most small companies don’t do a budget, we often use the prior 12 months as a basis for the next 12 month’s budget. We want to make this process easy.
  • A prediction is not a one-and-done thing. A prediction can be updated quickly and easily, so it can be done every month so that your client has a rolling 12-month view of their future.
  • A prediction doesn’t require a complex spreadsheet. We have incorporated the function of a complex spreadsheet into our easy-to-use online tool. You don’t need to worry about a formula error somewhere or a bad assumption that drives an erroneous result. You just concentrate on your inputs and the results.
  • Finally, we have found that you understand your prediction better when you create it yourself or participate in its development. That’s why we made ProjectionSmart for the small business owner without a strong finance or accounting background.

So a ProjectionSmart prediction is not overly technical and difficult. It is focused on the small business owner. It provides maximum benefit for minimal result. Done monthly, a prediction provides a rolling 12-month look ahead to see where their business is going. That will give your clients exactly what they need to succeed.


Monthly prediction service

So add a monthly prediction prepared with ProjectionSmart to the services you provide your clients every month. ProjectionSmart is very simple to use, and it requires only a few minutes per month to achieve many benefits for both them and you.

Maybe you are able to bill for an additional hour each month to create their prediction, or maybe you bill them an additional fee for their prediction. It’s up to you.
                                                
When you do a monthly prediction with your clients, they will be more successful and more comfortable with their numbers. They will be anticipate and avoid problems, leverage resources more effectively, make more quantitative business decisions, and feel much better about their business’s future – all because of you!

On your side, you will increase your monthly revenue, have happier and longer-term clients, help your clients be more successful, and differentiate your practice.
                                         
After all, who doesn’t want happier and more successful clients and more revenue? Let us help.


Here’s a video to show you how easy ProjectionSmart is to use.                                                                               
                                    
Try out the new ProjectionSmart here.


 

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