Budgeting

6. Sensitivity Analyses

6.1 Using forecasting software, it is easy to analyse the potential effects of changes to your budget assumptions.

• You can see the effects on your cashflow, profits and balance sheet.

6.2 As a minimum, carry out sensitivity analyses on different levels of sales.

• Typically, you might work with optimistic, pessimistic and most-likely scenarios.

6.3 Analyse the effects of any changes to significant costs.

6.4 Check the impact of any other significant risks to your business.

• For example, if 30 per cent of your turnover comes from one customer, what would happen if they stopped buying from you?