Forecasting Uncertainty In Your Business

June 12, 2025

Increased tariffs on imported goods can often have unforeseen consequences. Import duties may boost demand for certain American manufacturers, but can also disrupt supply chains, inflating production expenses and squeezing margins overnight. Service industries are not immune to the impacts of the duties, as higher prices on imported goods can decrease the discretionary income available for consumers to spend on services. The current dynamic state of trade deal negotiations, which may result in significantly different tariffs than those currently imposed, are an additional source of unpredictability that businesses must navigate.

Businesses that understand and anticipate their risks can adapt quicker, optimize decision-making, and grow faster. Many companies plan their financial future assuming stable conditions and historical growth rates, only to be blindsided by unexpected costs and revenue fluctuations. If businesses fail to include the correct variables in their forecasting models, they risk being caught unprepared, leading to slower or declining revenue growth, lower margins, or liquidity concerns.

The most successful businesses approach financial forecasting with adaptability in mind, often using these best practices:

1. Scenario Planning: Instead of betting on a single economic trajectory, companies should model multiple financial scenarios. Different combinations of likely scenarios, based on the risks and opportunities the facing the company, help leaders anticipate different outcomes and prepare appropriate responses.

2. Continuous Budgeting: Rigid annual budgets do not properly account for uncertainty. Shifting toward a rolling budget approach, adjusting plans periodically based on real-time conditions, helps businesses stay responsive.

3. Hedging Strategies: Companies should consider hedging strategies, such as securing long-term contracts with suppliers, diversifying sourcing locations, and negotiating volume discounts, in their forecasts as potential opportunities to mitigate price shocks.

4. Cash Flows: Maintaining liquidity reserves can provide breathing room when unexpected downturns arise, ensuring continued operations without relying solely on debt financing. Forecasting cash flows is key to ensuring a business can appropriately operate and grow, regardless of the economic environment.

Financial forecasting is more than just predicting revenues and costs – it’s about preparing for the unknown. Businesses that build flexibility into their financial models and proactively account for uncertainty will be well-positioned to navigate challenges, seize opportunities, and maintain resilience in a rapidly evolving economy.

Stradiot Consulting & Advisory provides expert planning and forecasting solutions tailored to businesses of all sizes. With deep financial knowledge and strategic expertise, we deliver the insight and guidance your business deserves to navigate uncertainty and drive success.

This article is for informational purposes only and should not be relied upon as financial, investment, or business advice. If you would like personalized guidance on financial forecasting or consulting, please contact us.