For most small- and medium-sized enterprises (SMEs), everyday concerns tend to take precedence over the long term. This is hardly surprising, since many SMEs have precious few resources to dedicate to long-term growth. A day-to-day perspective of the company’s finances may often make the most sense when the future seems uncertain and, therefore, too risky to bet on.

Regardless, any SME entrepreneur who wants to create a sustainable business that still exists 5, 10, or even 20 years from now must be able to come up with credible financial projections. These can serve as a roadmap to guide SMEs so that their cashflows are effectively managed and so that they can secure meaningful stability. Financial projections are also important for SMEs seeking outside investment since these give potential investors a good idea of what to expect over the long term.

Of course, for projections to be useful, they need to be reasonably accurate. Here are some important best practices that you can use to improve the quality of your SME’s forecasts:

1) Seek Professional Advice

Even if you happen to be an accountant or finance professional yourself, it’s still a good idea to let experienced professionals handle long-term projections for you. If you’re based in the area, consult with financial advisors and accountants Dunedin-based SMEs trust, who have a track record of providing actionable guidance and accurate long-term insights.

2) Use Historical Data

Whether or not you go with a professional for your projections, you must make sure that they are firmly grounded in your SME’s past performance. Avoid the pitfalls of an overly optimistic view and leverage your past data to arrive at a more accurate picture of the future. This data can provide a realistic baseline and can even help you identify patterns that may be helpful to your business going forward.

3) Involve Key Business Stakeholders

Once a business reaches a certain size, it becomes difficult for any single person to fully understand all the issues that affect it. For that reason, you must engage key department leaders, investors, and other critical personnel in the forecasting process. Their specific insights into the current goings-on on their sides of the business can provide you with a more comprehensive basis for your projections.

4) Validate Assumptions

It’s difficult to remove bias from assumptions, but you can minimise bias with sound data. Reviewing and validating assumptions improves accuracy, making projections a truer reflection of what’s likely to occur. Make sure to validate all assumptions, regardless of the influence of the individuals making them.

5) Use Financial Software Designed for SMEs

How an organisation handles data management challenges like collection and analysis can influence the accuracy of any resulting projection. Knowing that, invest in financial software that can help you automate various data management activities to save time and cut down on manual errors, resulting in faster, more credible projections.

6) Plan for Multiple Likely Scenarios

Even when you follow all the best practices for forecasting and data management, it’s impossible to guarantee that any single projected scenario will play out exactly as described. For that reason, you’ll want to develop multiple financial scenarios, including best-case, worst-case, and most likely outcomes. This way, your organisation can plan for multiple different eventualities while mitigating the effects of pessimism or over-exuberance.

7) Stay Informed About Market Trends

All the SME’s leaders must keep abreast of industry trends and economic conditions, both at home and abroad. In particular, keep a close eye on shifts in consumer behaviour, new technological advancements, or impending regulatory changes that could directly affect the SME’s production and the demand for its offers.

8) Set and Monitor Key Performance Indicators (KPIs)

Every business has its own values and goals. It doesn’t make sense for an organisation that is after longevity to have the same focus in its projections as one that is pursuing growth at all costs. With that in mind, you and other key stakeholders must select some KPIs with which to contextualize the success of your projections. This way, the organisation’s leaders have an idea of whether they are doing well according to the standards they’ve set for themselves.

9) Regularly Update Your Projections

Even the most reasonable assumptions won’t always hold true from year to year. Failing to revalidate and update these in time may eventually result in your projections going out of date, reducing their usefulness for your organisation. Financial projections should be dynamic and regularly revisited annually or after every major event to reflect current business conditions as they truly are.

Face Ongoing Financial Challenges with a Clear Roadmap

In countries like New Zealand, SMEs continue to face a range of financial challenges owing to fluctuating market conditions, access to capital, and rising operational costs—particularly in real estate. However, even in cases when SME leaders understand the need for financial forecasts, it can be difficult to set aside the resources to create them.

Thankfully, getting professional advice and implementing the other tips above should give SMEs the means to take on future challenges with minimal risk. After following these best practices for some time, it won’t be difficult for SMEs to come up with their own industry-appropriate approach to financial forecasting as part of regular enterprise planning. Over time, even a business like yours can make the most of its modest resources, and you’ll gain the visibility you need to stay relevant and competitive for years to come.