29 Jul How Small Business Owners Can Finally Get Ahead of Their Numbers 

“You can be profitable and run out of cash. It happens all the time. Also, the reverse can be true.”

For many small business owners, the numbers don’t always add up. You might be showing a profit on paper, but still feel like you’re constantly behind. Or you could have cash in the bank, yet no real sense of whether it’s enough (or how long it will last).

These disconnects are symptoms of a bigger problem: most business owners don’t have a clear view of what’s coming next. They’re making decisions in the dark, relying on gut instinct, bank balances, or outdated reports to manage an increasingly complex set of demands.

That’s not a bookkeeping issue. It’s a planning issue.

Bookkeeping is built to track the past. But running a business requires more than hindsight—it demands foresight. And that’s where the benefits of forecasting come in.

What Bookkeeping Is and Where It Stops

Bookkeeping is the backbone of financial compliance. It tracks every transaction, categorizes revenue and expenses, and ensures your records are in order when tax season rolls around. 

As Kathy Gregory, Head of Business Forecasting at Lookahead Advisory, explains, “The importance of having a good bookkeeper is to keep a business compliant… It’s taking all the spending that happened in the business and organizing it.”

But while bookkeeping is essential, it’s also inherently backward-looking. It tells you what happened, not what’s coming. It can show where your money went, but it won’t help you decide where it should go next.

That’s a risky blind spot for any business owner—especially when cash flow problems are involved.

According to the US Chamber of Commerce, cash flow problems are the number one reason for business failure. And a JPMorgan Chase study found that half of all small businesses have fewer than 15 cash buffer days, leaving them vulnerable to even minor disruptions.

Knowing where you stand today is not the same as knowing where you’re headed. And for many founders, that’s where the trouble begins.

Go From Backward-Looking Reports to Forward-Looking Forecasts

When the only data you’re using is historical, it’s easy to fall into a reactive rhythm. You operate as usual, waiting until problems arise, and then have to solve them under intense pressure. 

Unfortunately, this is an all-too-common occurrence, and something that Kathy sees regularly because “bookkeepers will only ever talk to you about what you already did.”

Without a way to plan forward, even profitable businesses find themselves constantly fighting fires. They react to symptoms—such as cash shortages, unexpected expenses, and rising overhead—without understanding the root cause or how to address it sustainably.

“Most clients come to us with a problem,” she says. “They’re not on fire, but they’re trying to get to a goal—and don’t have a clear path to get there.”

That’s where forecasting changes the conversation. It allows you to anticipate outcomes, test decisions in advance, and create a plan that extends beyond the next invoice or payroll run.

Max Morgan, a partner at Lookahead and a former client himself, puts it plainly:

“The impact you guys had on our business was gigantic… We needed to take that next step financially, and I don’t think we could’ve done it without a forecasting model.”

Forecasting Starts With Knowing Your Business

Once you recognize that historical reports alone aren’t enough, the next step is building a better lens to look ahead. That’s where building a forecast begins—not with a complex spreadsheet or finance degree, but with a simple shift in perspective: start by understanding how your business actually works.

“Most business owners haven’t had to define their business model in a structured way,” Kathy notes, “but that’s the foundation of forecasting. You can’t project numbers until you know what’s driving them.”

She walks clients through four core questions:

• What do you sell?
• Who do you sell it to?
• How do you sell it?
• Who and what do you rely on to make it happen?

This isn’t busywork—it’s the key to moving beyond surface-level goals like “grow sales” or “cut costs.” When you break your operations down into real drivers, you can start to identify which ones are moving the needle and which ones are holding you back.

That’s when forecasting becomes both possible and practical. Knowing this information then allows you to  build early models around performance indicators like:

• Sales pipeline and close rates
• Churn or retention (especially for recurring revenue models)
• Gross margin—“often overlooked,” she says, but essential for seeing whether the product or service itself is profitable
• Net profit
• Monthly spending ratios across payroll, marketing, and overhead
• Cash flow forecasts, AR balance, and AR days

These are just examples. 

The point isn’t to track everything, it’s to track what matters. The right forecast reflects your unique business model and gives you the confidence to plan, pivot, or invest when the time comes.

As Kathy puts it:

“Unless you know the drivers, you can’t affect them.”

This clarity is what transforms forecasting from a vague finance buzzword into a powerful decision-making tool. And once you’ve built the foundation, the next challenge is learning how to use it—month to month, and year to year.

Planning One Month Ahead and One Year Out

One of the biggest misconceptions about forecasting is that it’s all long-term strategy and guesswork. In reality, it’s most powerful when paired with short-term decision-making.

“You can’t manage the future if you don’t manage the present,” Kathy notes. That’s why she builds a cadence with clients that includes both monthly spending decisions and forward-looking analysis. “We’re always looking at how you’re tracking this month. We’re looking pretty deeply at what’s going on next month—line by line.”

At the same time, she encourages clients to zoom out regularly and evaluate the bigger picture: cash balances three, six, even twelve months out, and whether current trends align with long-term goals. 

Over time, it becomes a habit. A rhythm. A system for staying grounded in today’s reality without losing sight of where you’re going.

“Once clients see that it’s possible,” she says, “they’re pretty happy to be looking far into the future.”

Bookkeeping and forecasting aren’t competing tools—they’re complementary. One tells you what’s happened. The other helps you shape what happens next. When they work together, they give you something most businesses lack: visibility and control.

Proactive Planning Connects Your Business and Life

Financial planning shouldn’t happen in a vacuum.

The financial health of your business is often directly tied to your personal goals, whether you are conscious of it or not. 

Saving for retirement, creating more flexibility, or building wealth for the next generation—there’s always something driving you as a business owner. That’s why proactive planning matters so much. It’s not just about improving margins or managing payroll. It’s about having clarity. About knowing when it’s time to invest, when it’s time to wait, and how today’s choices ripple into your future.

“The similarities between the business planning you do and the retirement planning we do can’t be overstated,” Max says. “Each client has their own financial model… and the way we attack it is the same.”

If you’re ready to move beyond gut decisions and bank-balance budgeting, start by building a forecasting habit. Get clear on the drivers that actually move your business and give yourself a way to plan for what’s next.

Start forecasting smarter, spending with purpose, and planning for what’s next with a simple conversation.

Connect with Kathy today. She’ll help you connect the dots between operations, finances, and long-term goals—and bring structure to the part of your business that’s been running on instinct for too long.