In the current economic climate, scaling a business takes more than ambition – it requires foresight, flexibility and financial discipline. Yet many growing businesses operate without robust forecasting, putting their success at risk.

According to the British Business Bank, nearly a third of UK small and medium sized enterprises (SMEs) highlight cash-flow challenges as a primary obstacle to growth. And with inflation, supply chain instability and fluctuating interest rates all contributing to market unpredictability, a static or overly optimistic financial forecast simply won’t do.

Accountants are well-positioned to guide scale-up businesses through this uncertainty. Delivering strategic value through smarter, more dynamic forecasting will open doors for your clients.

Look at your best and worst case scenarios

Many early-stage businesses associate forecasting with compliance, rather than day-to-day decision-making. Once a business enters a growth phase, however, including hiring staff, opening new locations and increasing marketing spend, the need for real-time financial planning becomes critical.

“Entrepreneurs’ runways are shorter than they often think. You always need a backup plan and a backup plan for your backup plan,” says Anne Allibone, portfolio CFO and commercial adviser for start-ups, scale-ups and SMEs. 

Look at your best case scenario, but also your worst case scenario, Allibone recommends, with a plan for what you would do in both situations. “I have had a couple of clients where you agree a good funding round, or some sort of investor input, and then often entrepreneurs almost bank on that happening. Or you bank on a certain client paying, or new business coming in, and if it doesn't, you need to build in buffers,” Allibone says.

Understand future cash requirements

Without a clear understanding of future cash requirements, scale-ups risk overcommitting resources or running into working capital constraints, especially when growth outpaces operational capacity.

“During the growth stage, there’s a temptation to scale quickly, to take on more, say yes to everything, and model your path after others,” says Megan Stachini, a business transformation specialist. “But true, sustainable growth requires discernment. This is where flexibility becomes non-negotiable – not just flexibility in how you structure your time or team, but flexibility in your identity as a leader.” 

Conduct agile forecasting

Traditional, annualised forecasts are too rigid for scale-ups and a more agile approach is needed to allow for regular updates, scenario planning and cross-functional insight.

Scale-ups often face a volatile mix of internal and external pressures, including:

• Inconsistent revenue patterns from new markets or products
• Rising fixed and variable costs associated with scaling infrastructure
• Limited historical data to inform projections
• Delayed payment cycles that impact cash availability
• External uncertainty, from economic policy to customer behaviour

Emma Grant, Co-Director at digital agency Figment, says: “Focus on strategic planning and market understanding. Start by analysing your target audience deeply to identify new opportunities and unmet needs. This insight will help you tailor your products or services as you expand.”

Building flexibility means designing your business model so it can evolve with changing market conditions, says Grant. For instance, diversifying your revenue streams reduces dependence on a single source and spreads risk. It also helps to develop partnerships that can provide additional resources or expertise when needed.

Rolling forecasts, typically updated monthly and projecting three to 12 months ahead, provide entrepreneurs with the leeway to adapt plans in response to new information. They’re particularly useful for identifying future cash shortfalls or capacity constraints before they become critical.

Take on business-wide input

Forecasting should not live solely in the finance function. Inputs from sales, marketing, HR and operations are essential to reflect changes in lead times, hiring plans, customer demand or pricing strategies.

Moreover, forecasts are most commanding when linked to strategic decisions. Use them to test the viability of growth initiatives. Also, it’s advisable to set up regular cross-functional forecasting reviews with your clients to ensure the model reflects operational reality and that all decision-makers understand its implications.

In an uncertain economy, no forecast will be 100% accurate. The goal is not perfection, but agility. A well-designed forecast helps clients adapt quickly, avoid surprises and make growth decisions with confidence.

As businesses across the UK continue to scale amid complex conditions, ICAEW members have a vital role to play in transforming forecasting from a static exercise into a strategic advantage. 

Find out more

• ICAEW Business Finance Guide
• Learn more about cash flow planning tools