The Importance of Forecasting Your Revenue and Expenses

Forecasting Revenue

Whether a business is big or small, a big part of its success rate depends on the forecasting, research, and planning that went into it. All three of these have their place in many different aspects of business, but they are especially prevalent and needed when thinking about both the potential revenue of a business and the expenses that the business will have. One of the top reasons that businesses fail is because they didn’t properly forecast their revenue and expenses. So, it is extremely important that you take the time to forecast. Let’s dive a little deeper into why this is true.

What are Revenue and Expenses

First, let's talk about what exactly revenue and expenses actually are. Revenue is the amount of money your company is bringing in. This amount is before any expenses or costs are taken out. Expenses are the things you have to pay to keep your business running. Some expenses are office rent, supplies and materials, advertising, employee salaries, taxes, and more.

Revenue, Expenses, and Cash Flow

Cash flow goes hand in hand with revenue and expenses. What exactly is cash flow? It is the amount of money that is flowing in and out of your bank account. Your revenue is the money flowing into your bank account and your expenses are the money flowing out of your bank account. By knowing what your revenue and expenses will look like throughout the year, you will also know and will be able to control what your cash flow is going to look like.

Creates a Good Financial Plan

Properly forecasting the revenue and expenses of your business will help you create a strong and safe financial plan. Knowing at any given time the amount of money you will have to work with, helps you plan out what risks you can take in your business and when to plan for the production of your products.

Secures Loans and Credit

A solid understanding of what your revenue and expenses are going to look like for the year and years to come will help you secure loans and credit for your business. Banks and other lenders want to know what the risk and reward will be for them, so you must have a solid financial plan. Make sure to back up your forecasting with research and facts. The more you can actually prove to a potential lender to be true, the more likely you will get a loan or credit from them.

Helps with Market Research

Needing to forecast for the potential revenue of your business forces you to do market research. You will have to learn all about your customers, what their likes and dislikes are, when they are likely to buy, and how much money they are likely to give you. Doing this kind of research not only helps you predict what your revenue is going to be but also gives you helpful information you can use in marketing tactics. The better you know your customer, the better you are able to market to them. Being able to market to your customer in a way they respond to will bring you in more revenue.

Don’t Wait to Forecast

It is extremely important that you don’t wait to forecast for your revenue and expenses. This kind of forecasting is what helps you create a solid financial plan for your business, and in turn creates a comfort in your numbers and business viability! Say goodbye to self-employed financial fear.

If you have any questions regarding financial forecasting or other accounting topics, please don’t hesitate to reach out to us. Shoot us a message on our contact page and we will be in touch with you soon! As an added bonus, check out our Monthly Forecasting and Goal Tracker.

The Importance of Cash Flow


When you are thinking about your business financial assets, you are probably thinking about the money you have in your bank account right now. However, when you think about the money your business has to work with, you need to dig a little deeper. Just considering the money you have in your bank account now isn’t enough. You need to think about the money you have in your account, as well as the money that is going to come in and out of your account. This is where the idea of cash flow comes in.

What is Cash Flow  

When we are talking about Cash Flow, we are talking about the amount of money that is flowing into your bank account and the amount of money that is flowing out of your bank account. Money flowing into your bank account includes closed sales, deposits from customers, loans from banks, tax refunds, and interest from savings and investments. Cash flowing out of your bank account includes employees’ salaries, sales tax, income and payroll taxes, loan payments, rent, and building expenses.

Why is Cash Flow Important?

Knowing your financial situation means knowing your cash flow. If you know what money will be coming into your bank account and coming out of your bank account, you are able to forecast what your future financial situation will be. The best part of knowing your cash flow is you are able to know what risks you can take financially and what risks you can not take. Having a good cash flow where more money is coming into your bank account than coming out means you are budgeting correctly. If the amount of money coming into your bank account continues to increase, you are doing a good job of increasing your sales and managing your expenses.

How to Get a Successful Cash Flow  

1.     Know your Base Operationals – Knowing exactly what your expenses are every month helps you keep track of what money is going to be flowing out of your bank account. It also helps you create and stick to a budget.  A great way to keep track of your operationals is to create a running list of your expenses and update it as things change.

2.     Keep your records up to date - Understanding the cash flow of your business will not happen unless you keep records of what money is coming in and out of your business. If you fall behind, your knowledge of your cash flow will be off. The better organized your records are, the better you can account for the money you will have in the future.

3.     Have SAVINGS – Having money saved is extremely important. It gives you something that you can depend on being in your bank account each month in case some type of emergency comes up. We recommend having at least 3 months’ worth of expenses in your savings account and 1.5 months’ worth of expenses in your checking account.

4.     Set Your Budget and Track It – Having a set budget means you have consistency in your cash flow because you are keeping what is coming out of your bank account to a set amount.  This gives you a safety net and something to rely on. Compare your budget to the cash coming in and out of your bank account. If you set your budget in the beginning and notice something that is not working or off, adjust it and then keeping tracking it.

Need Help Improving or Understanding Your Cash Flow?

Understanding your cash flow and improving it can be a little daunting but don’t stress over it, we are here to help you! Connect with us on our contact page and we will be in touch with you soon. Don’t forget to check out our Monthly Cash Flow Manager.

The Best Bookkeeping Tools

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In our last blog post, we discussed the bookkeeping tips that you need to know for the new year.

One of the easiest ways you can get your bookkeeping in order is to use the various tools and software available specifically for small business finances. These will help keep track of your accounts payable, accounts receivable, payroll, business expenses, taxes, and more. It also means fewer paper records - and the less physical documents you have to keep track of, the less time you have to spend filing and organizing. MAJOR time saver!

There are a lot of bookkeeping tools available, but they are not all created the same. Sometimes it can be tricky to decide which bookkeeping tool is right for you, so we have put together a list of our favorite and most trusted bookkeeping tools that will save you time and make your life a lot easier.


When it comes to bookkeeping tools that help with taxes for the self-employed, bSolo is one of the newest! This bookkeeping tool is one is super innovative and makes saving for your quarterly taxes simple. When you input your income, bSolo automatically sets aside a portion of that income for taxes. The tool tracks the tax deadlines for you and sends in your tax payment on time to the IRS.


Track1099 is another great bookkeeping tool if you pay independent contractors! It allows you to submit your 1099 forms electronically (and cheaply) to the IRS. You simply login to the online tool, upload the data manually or as a CSV file, and either select to e-file the forms or physically mail them into the IRS and to your recipients.


TaxJar is THE tool to choose if you need to calculate and file sales tax - especially with all these online sales tax changes currently happening! TaxJar seamlessly connects to your e-commerce shops and automates your sales tax calculations for each and every state. Say bye-bye to those annoying spreadsheets!

Not only does TaxJar do your sales tax calculations for you, but it also prepares your state returns. TaxJar even files these state returns for you after it finishes preparing them.


HelloSign is one of those tools that lets you kill two birds (or more) with one stone. This software allows a company or person to safely e-sign multiple types of forms. Specifically related to taxes and bookkeeping, HelloSign allows you to electronically sign invoices, tax forms, bank forms, and more.

QuickBooks Online

QuickBooks Online is essentially the holy grail of all-around bookkeeping systems that pretty much everyone has heard of at some point. It is available to the general public and is widely used by the self-employed, small businesses, and accountants. QuickBooks Online helps you with your business by tracking income and expenses, maximizing tax deductions, keeping track of invoices and payments, running all sorts of insightful reports, and much more.

Pair the Perfect Tools with Professional Help

Just remember that these tools are not a replacement for your accountant and not every tool is going to do all of the bookkeeping tasks you need. The tools are meant to work in conjunction with your accountant. By utilizing both of these things, your bookkeeping will be organized and ready to go for years to come.