Reason #4 Why You Should Do Business Projections

Apr 06, 2021 by Roger Scherping

Roger recently appeared on the Small Small Business (SSB) podcast. Learn how SSB helps small businesses here.

Roger discussed 10 reasons why you should do business projections. Here’s reason number four.

Roger Scherping: OK, number four is, “Do you want to grow?” If you want to grow, you’ll learn that nothing taxes your resources more than growth. Your cash is getting sucked up by an increasing amount of receivables, by inventory going up, you may be making capital expenditures, you’re hiring additional people, you need more working capital – all that. All that sucks up your cash. So if you do plan to grow in 2021, do you know how much cash you’re going to need? Because the worst thing that could happen is you get this thing going and get it rolling, and all of a sudden you run out of cash.

Steve Fredlund: That’s so good. That’s a question I always encourage people to ask. You always ask the question, “What if this doesn’t work?” But then you also have to ask the question, “What if this actually DOES work?” Like you’re saying, all of a sudden, you know, there’s a huge capital strain.

Roger: Right. And this is not anything to be afraid of at all because banks love to lend to growing companies. They love to. They’ll lend on receivables, on inventory, on capital expenditures. They’ll even lend on cash flow. So, I mean, I’ve gone to bankers with businesses that were NOT doing well, but when you go to them with one that IS doing well, they fall all over each other. So that’s nothing to be afraid of. So understand what your growth will do by doing a projection.

Listen to Roger’s previous reasons on our YouTube page.

You can hear the entire podcast here.