From growth management, social media strategy, paid media, creative direction, and influencer marketing, large and small marketing agencies alike are responsible for juggling it all.
Thankfully, you’re confident and equipped to manage these efforts and deliver on what you promise to the brands you work with.
But throughout the day-to-day of managing all of these moving parts, it’s easy for other areas of your business to slip through the cracks. Maybe you haven’t analyzed financial data to determine where your business is headed in a couple of years… Or perhaps you’ve never performed financial forecasting on your business at all…
For the sake of clarity, let’s define what we’re talking about —
Financial forecasting identifies trends in your business's data and then projects those trends to provide information about what the financial status of the business is likely to be in the future.
Forecasting is not just important, it’s critical. And we don’t want you to let another year pass without identifying the numbers you need to know to gain control of your business.
As a company designed to meet the specific needs of creative businesses, we want to help marketing agencies like you thrive. Here are the 5 reasons financial forecasting is critical to scaling your marketing agency:
1. It helps identify if your current plan is working
‘Knowledge is power’ absolutely applies when it comes to operating a financially healthy business. Businesses don’t reach financial goals by happenstance. There’s strategy, advisory, and (you guessed it) forecasting involved to reach the potential impact you can make as a marketing agency in any given industry.
With financial forecasting’s analysis of your business to date, you’re able to identify what’s working, what’s not working, and plan ahead to ensure you don’t repeat patterns that have proven to be ineffective.
2. It becomes a trusted resource as you shape the next year’s budget
No more guessing when it comes to where you should allocate funds in the coming year. Financial forecasting is the only resource that provides the clarity and confidence you need to head into the next year or quarter of business with a proper budget in place.
If you’re overspending, underspending, or simply spending in the wrong areas, you’ll be able to take advantage of the data and use it to spend properly moving forward.
3. It brings clarity to your P/L margins
Even if you think you have a grasp on your profit and loss margins, an accurate financial forecast will help you get ahead of the game so you can anticipate and prepare for any challenges that may come your way – and as a business owner, you know the occasional challenge is inevitable.
That’s why no matter what kind of agency you run, a deep understanding of your bottom line is essential to scaling your business.
4. It keeps your cash flow growing
When your business revenue is solid, you can focus on where you’re headed as a marketing agency. It’s possible financial forecasting will open your eyes to an area of your business you hadn’t focused on in the past.
For example, there may be an opportunity to improve cash flow within the influencer marketing niche — and with your forecasted revenue in hand, you can refocus your business to meet the needs of the market and ultimately increase your cash flow.
5. It encourages confident decision-making about the next steps for your business
You’re probably overwhelmed daily with questions like— Should I grow my team? Scale back? Market to a different industry? Implement a new payment platform? (Lumanu Plus has you covered on that last one.)
The answers to these questions become clear when you have your numbers straight. So no matter what industry your marketing agency serves, financial forecasting will help you become a better leader as a whole.
As a marketing agency and marketing expert in general, you’ve experienced firsthand the growth a business is capable of when they have the capital to invest in the proper efforts. At Lumanu, we want to ensure you’re doing the same for your own business.
Schedule a call with our team to learn more.