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When we set out on a fishing trip or hike, we always check the weather forecast.
It’s no different in business. The forecast tells us if there’s bad weather (poor cashflow) in store based on the direction we’re heading.
Your forecast will tell you:
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Whether you have enough sales in the pipeline to give you the desired level of profit you want for the year.
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Whether your margins are appropriate.
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If you need to review your pricing or production processes.
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If your business is running as efficiently as it could be.
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Where savings can be made.
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Whether you should invest more to get a better return.
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How much money you need to set aside for tax.
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How much money you can draw out of the business each month without running short.
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How much debt you’ll be able to pay off.
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Whether or not you will be able to meet all of the bank’s requirements.
The difference between a business forecast and a weather forecast is that, when the business forecast is showing bad weather, you can do something about it to make the sun come out. The forecast will tell you what’s going well and what’s not, so you can make adjustments to reduce the impact of bad weather.
Just as you wouldn’t go fishing without checking the forecast, you shouldn’t run your business without an annual forecast. So, don’t live in your raincoat, waiting to get soaked - take control and talk to us about getting your forecast done so you know what to expect.
“Planning is bringing the future into the present so that you can do something about it now.” - Alan Lakein
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The question that is top of mind for most is whether or not interest rates are going to go up or down. This is especially true if you’re looking to get into the property market or make a change to an existing portfolio.We might not have a crystal ball, but we do know the following:
Official Cash Rate (OCR)
- No change to OCR as expected
- The 2 year interest rates have dropped at most major banks to 3.49% pa
What’s in it for Residential loan borrowers
- Expect to see more competition between banks
- 1 – 2 year fixed rates still represent the best value, suggestion is to still take shorter term punt
Where to from here
- Wholesale markets are pricing in 50-75% chance the OCR will be cut again in November 2019
- Expect the downward trend in interest rates to continue due to global economic conditions and pressure on inflation targets
Talk to your Accountant at biz about your residential lending and we can help guide you on the best rates and next steps.
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