When you're planning for the next year (or the next three years), there are likely a lot of exciting new plans or initiatives on the horizon. Perhaps you are looking to hire some new employees, to purchase new assets for the business, or to take on external loans or funding. Microforecasts can help you manage these plans, or events, in a way that's easy and incredibly powerful.
Microforecasts are a self-contained set of P&L and Balance Sheet movements that represent an event in your business and its financial impacts. Microforecasts can be used to isolate the impacts of individual business decisions for greater visibility on how these decisions influence the main forecast and greater flexibility in planning for these events. You’re then able to easily turn these microforecasts on or off and to change their timing.
Microforecasts can help you find answers to some of the following questions:
- Should I start selling my products through Uber Eats?
- Should I sell a new product?
- Is it financially feasible to hire a new sales person?
- Should I buy a new truck for deliveries?
Creating a Microforeacast
Microforecasts open the floodgates to a combination of features. Microforecasts give you the ability to model out specific business decisions and to plan the best times to implement each one. The combination of the business roadmap and ‘Quick Metrics’ bar can help you visualize the financial impacts of each microforecast and easily change the timing of potential plans.
To create a microforecast:
1. Navigate to the ‘Microscope’ icon on the left hand side of the main forecast grid. This will open up the Microforecast Manager. Here you can edit existing microforecasts or create new ones.
2. You can create a new microforecast from the ‘three dot’ overflow menu or from the ‘+ Create a new microforecast’ button at the bottom of the Microforecast Manager.
3. Once selected, you will be prompted to:
- Name the microforecast
- Give the event/action a start date
- Log it into a category, if applicable. If the desired category is not listed, categories can be created after the microforecast has been created.
You can then start with a Microforecast Wizard, which will allow you to fill in information to help you come up with the P&L and Balance Sheet impact for common business actions, including hiring an employee, buying an asset, or taking out a loan.
The wizard will guide you through a series of questions to help set up your microforecast by setting account linkages, tax and interest rates, employment details and amortization or depreciation, if applicable.
Alternatively, you can start from scratch and build a microforecast with individual chart of account line items, selected by using the ‘Add account’ option. Account linkages and value rules that are set up in your main forecast will be respected here, however you can override these items account by account.
Categorize your Microforecasts
Once your first forecast is created, you can use the ‘three dot’ overflow menu to create a category. A category allows you to group a series of microforecasts together and is handy for looking at items together on the business roadmap and for creating scenarios to layer on top of your baseline forecast.
You can then use the filter in the microforecast panel to toggle between your categories, for example: hiring events, capital expenditures, marketing campaigns, to see just the items that belong to a forecast.
Microforecasts on the Business Roadmap
The Business Roadmap is a timeline based view of microforecasts. You can change the timing of a microforecast by grabbing the bar and sliding it from left to right. This allows you to explore the various impacts of possible microforecast timings on your Quick Metrics. Microforecasts can easily be added to the business roadmap by hovering over the name of the microforecast on the left hand side and toggling it on or off.
You can also see all inactive microforecasts by hitting the ‘View inactive Microforecasts’ button in the top right hand corner next to the search bar. This shows all microforecasts that are currently inactive, and allows you to switch them on in your Forecast.