Top 5 Forecasting Mistakes Small Business Owners Make

Marketing Manager
May 20
2 min read

(And How to Fix Them in 2025)

Person in a suit, wearing red glasses, leans over a wooden table, looking frustrated at a laptop. Plain white background. — Photo by Andrea Piacquadio

In business, a strong forecast can be the difference between riding the wave and wiping out. Yet for many small business owners, financial forecasting feels like staring into a foggy crystal ball.

Let’s clear it up.

Here are the top 5 forecasting mistakes we see small business owners make—and the smart, practical fixes to stay ahead in 2025.

1. Mistake: Guessing Instead of Using Data

What’s going wrong: Too many business owners rely on gut feel or “last year’s numbers plus 10%” when forecasting revenue.

The Fix: Use real, recent data from your accounting software or POS. Integrate tools like Xero, QuickBooks, or ProfitCloud’s financial dashboards to pull in rolling averages and seasonal patterns you can actually trust.

📊 Pro tip: Even three months of solid data can beat a gut guess every time.

2. Mistake: Forgetting Cash Flow

What’s going wrong: Revenue looks great on paper—but you’re still scrambling to make payroll. Sound familiar?

The Fix: Don’t just forecast profits—forecast cash. Include timing of payments, expenses, and tax liabilities. A business can be profitable and still go broke if cash flow dries up.

💡 Fix this with weekly cash flow snapshots—especially during seasonal dips or growth phases.

3. Mistake: No “What-If” Scenarios

What’s going wrong: You plan for Plan A. But what happens when sales slow, a supplier delays, or interest rates hike again?

The Fix: Build at least three versions of your forecast:

Best-case
Most likely
Worst-case

Stress test your forecast like your future depends on it—because it does.

4. Mistake: Ignoring Fixed Costs and Inflation

What’s going wrong: Your rent, insurance, or staffing costs go up—but your forecast doesn’t reflect it.

The Fix: Update your fixed costs quarterly and factor in inflation (especially in Australia’s volatile economic climate). Underestimating expenses is a silent killer for SMEs.

5. Mistake: Setting and Forgetting

What’s going wrong: You built a forecast in January... and haven’t touched it since.

The Fix: Forecasting is a living process. Review and revise monthly. Use live dashboards, talk to your accountant, and be ready to pivot based on reality—not assumptions.

🔁 A static forecast is a useless forecast. Keep it moving.

Bonus Fix: Get a Second Set of Eyes

Even the smartest founders miss things. Work with a bookkeeper, accountant, or business advisor who can help pressure-test your numbers and assumptions. (Hint: that’s us.)