As we enter a new year, the objective to grow and expand your business is likely to be on the cards for 2024. After several years of uncertainty in the business landscape, this year is expected to be far steadier. Business leaders can firmly plant both feet on the ground.

But where to begin? Growth is an extremely subjective measure. It’s also one of the most complex directions of travel for any business. There’s so much that can happen between now and the end of the year that could affect your plans.

It’s certainly not as straightforward as saying “This year, we’re aiming for growth and we’re going to do X to make that happen”. There are many nuances that need to be considered to ensure you reach your growth targets. That’s why, before you begin implementing any change in your business this year to support growth, you need to carefully plan your financial tactics.

1. Understand the importance of accurate strategic financial forecasting

Forecasting is the lifeblood of any successful organisation. Accurate, detailed financial growth planning can give clarity and direction to any decision you’re planning to make. Whether it’s understanding the efficacy of your upcoming revenue streams and therefore understanding the required cash flow, or knowing how you can most efficiently allocate resources, having a business forecast is the key to keeping your business moving in the right direction.

Of course, this isn’t to say the outcomes of this forecast won’t change. It’s very likely that they will, nothing is ever linear. But by beginning your financial year with a clear understanding of how you could meet your success criteria by year end, you’re starting with your best foot forward.

Ensure to revisit your forecast regularly, making amends as and when changes occur. Acting on these changes quickly, if necessary, is important. Leaving decisions to stagnate or falling foul of tunnel vision and sticking to your original plan, can leave your business lagging behind the competition. Forecasts allow you to be agile and give you the data to pivot effectively: use them wisely.

2. Keep on top of market trends

The technology sector changes rapidly. New trends emerge almost daily, and some of the most influential ones can spring up overnight. Take ChatGPT as a key example.

Launched in November 2022, it took the platform a mere two months to build a user base of 100 million people a month. Compare this to Facebook which took four and a half years to build the same usership. If you were a company specialising in the building of AI products at this time, adapting to remain relevant in a landscape dominated by ChatGPT would have needed to happen rapidly.

By staying abreast of crucial changes in the market, you can work closely with your in-house or outsourced finance team to understand where, how, and if these new technologies can be incorporated into your organisation or how you need to pivot to remain competitive.

3. Leverage data for forecasting

As part of the technology sector, it’s likely that you work in an incredibly data-rich environment. Everything you do and have done has been recorded, along with any outcomes. This is a gold mine of relevant information that you can use in your strategic financial forecasting efforts.

For example, you might spot that for the past two years, demand for your services has spiked in Q2 with a plateau and then a drop in Q3 and Q4. If this is a consistent trend, then you have incredibly powerful data here that can help drive meaningful and well-informed business decisions.

As you plan ahead for growth, don’t forget to look backwards. Your company’s data holds the most valuable insights you need to support your objectives.

4. Plan scenarios

Best case, worst case, somewhere-in-the-middle case; it’s crucial that you plan for every scenario you can think of. Get everyone from all divisions of your business in the room and brainstorm what could happen in the next 12 months, and how might that change your business’s trajectory?

By being of aware of what may be on the horizon for your business, you can financially plan for any uncertainties and feel more comfortable with the ‘what ifs’. Scenario planning can also help you to mitigate risk, identifying potential problems early and knowing how to tackle them in advance.

5. Identify your unique metrics

As I mentioned before, growth is a very subjective target and there’s no one-size-fits all metric for growth. Firstly, what kind of growth are you talking about? Do you mean headcount growth, revenue growth, service growth and so on? And when you’ve identified the type of growth, what scale are you aiming for? 5%, 10%, 50%?

Knowing exactly what growth success means to your business will help keep you on track and ensure you’re measuring effectively. Remember though, this should be a direction of travel. If things need to change as the year progresses, that’s okay.

So, there you have it, five key reasons why planning for growth before going for growth is crucial. But we’ve left one stone unturned, and that’s the question of time.

We know that financial forecasting and planning takes time, time that as a founder of a busy tech start-up or scale-up you simply might not have. Our specialist team of Chief Financial Officers are on hand to help.

With decades of experience between us, we’re here to provide you with guidance and insight to build out your forecast and plan for 2024. Whether you need a steer in the right direction to get started or someone to take the wheel completely, we’re here to support. Get in touch today.