By Graeme Harrison, Managing Director, CCBS
By November, many businesses have started turning next year’s ambitions into budgets and forecasts. This year, however, the Autumn Budget has given business owners even more reason to revisit their numbers before signing off plans for 2027.
Many forecasts are built around revenue targets and profit expectations, but the assumptions beneath those figures deserve just as much attention. Changes to employment costs, investment incentives and borrowing conditions can all affect how achievable a plan really is.
A forecast can appear healthy while overlooking when money will actually move through the business. Growth often brings costs forward. Stock may need to be purchased, people recruited or equipment secured well before the resulting income reaches the bank.
The issue is not whether the opportunity is profitable on paper. It is whether the business has enough working capital to deliver it without putting day-to-day commitments under pressure.
The challenge is not just responding to the measures announced in the Budget. Businesses are also planning against a backdrop of continuing economic uncertainty, making it even more important to test the assumptions that underpin growth plans.
Test the assumptions behind the plan
Before committing to investment or growth, business owners should challenge the figures beneath the headline forecast.
When will new revenue actually be received?
What must be paid before then? Have increases in wages, energy, materials and supplier costs been reflected? What happens if a customer pays later than expected, an order requires more stock, or implementation takes longer than planned?
The Autumn Budget has reinforced the importance of asking these questions. The National Living Wage will rise again from April 2027, increasing employment costs for many businesses. At the same time, enhanced first-year capital allowances may encourage investment, but tax relief does not remove the need to fund the upfront cost or understand the impact on cash flow.
Considering several scenarios can reveal a funding requirement that an annual profit forecast may hide. A stronger-than-expected order book can create pressure just as easily as slower trading if the cost of fulfilling demand arrives first.
Make room for the unexpected
Plans should also leave the business able to respond. An equipment failure, delayed payment, shifting market conditions or an unplanned opportunity can quickly alter cash requirements.
That flexibility may come from tighter credit control, different supplier terms, more disciplined stock management or a review of existing commitments. In some cases, external funding may be appropriate. The important point is to identify the requirement early, while there is time to consider the options properly.
Planning with confidence
The question for business owners is not simply whether their 2027 plan looks profitable. It is whether the assumptions behind it still stand up to scrutiny.
The Budget has introduced measures intended to encourage investment and support lending, but it has also increased costs for many employers. The result is a more complex planning environment where cash flow, affordability and timing may matter even more than headline growth targets.
Revisiting assumptions now can help directors distinguish between a plan that looks good on paper and one the business can deliver with confidence.
Graeme Harrison is Managing Director at CCBS. He works closely with business owners to understand their ambitions and challenges, helping them access appropriate finance for growth, investment and working capital.
www.ccbsg.co.uk | 0191 211 1471