Last year’s numbers hold every clue you need for next year’s clarity. I always start with one simple download: a Profit & Loss report by month. This report lets me click into each category and see exactly what happened in each period.

Then, I scan for three key things:

• Line items that grew faster than revenue
• Recurring costs that hit on autopilot
• Surprises that hijacked cash flow

That first pass shows where your money actually went, not where you think it went. From there, forecasting next year becomes clearer, calmer, and way more strategic.

Sort Costs Into Buckets That Behave Differently

Not all expenses move the same way. Separate them before you predict them:

• Stable costs: subscriptions, rent, insurance, software
• Activity costs: ads, shipping, merchant fees tied to sales volume
• Creepers: trials that became permanent, “one-time” upgrades, surprise rush fees

Stable costs get predictable, planned increases. Activity costs need to tie to your sales goals. Creepers get earmarked with reminders, so someone (you or your AP person) removes them before they become permanent line items on your P&L.

Turn Seasonality Into Monthly Targets

Every business has a rhythm. Maybe Q1 ad spend spikes, summer shipping increases, or you have extra payroll cycles.

I map the last twelve months into a simple seasonality index and apply that shape to next year, double-checking extra payroll months and known busy seasons.

This shifts your monthly targets from “educated guesses” to intentional, EPI-backed planning (Expenses + Profit = Income). It aligns cash flow with reality, improves inventory timing, and reduces those moments where income dips below expenses and panic sets in.

Put Price Changes and Contracts on the Calendar

Vendors raise rates. Leases adjust. Software tiers increase. I list each contract with:

• Renewal date
• Current rate
• Expected increase

Then it goes straight onto the calendar. If a price bump hits April 1, I want it reflected in the April forecast. I do not want to be blindsided by it when I am reviewing April, trying to figure out where the cash went. This one habit keeps your sales goals aligned and your margins protected.

Separate One-Offs From Your Run Rate

Big one-time purchases distort your true monthly cost structure if you treat them as “normal.” Your operating expenses should be steady enough that one big month doesn’t require $100k in sales just to break even.

Tag one-off projects like equipment, rebrands, or legal work so you know why a month spiked. If they happen again, keep them in your EPI formula. If not, remove them from next year’s baseline.

Build a Quick Annual Goal

Once your buckets, seasonality, contracts, and one-offs are clear, connect your activity costs directly to your profit and sales goals.

Put all the data into your EPI Formula (Expenses + Profit = Income). Add all new expense totals, apply your 50% profit multiplier, and there’s your new annual Income (Sales) goal.

From there, break it into monthly EPI goals (Expenses + Profit = Income) so you know when your high-cost months require extra padding from your SAVINGS account.

Create Money Milestones

Forecasts die when we create them and never look at them again. It’s so easy to say I am going to do a million-dollar year and then just use that as your “budget”. Spoiler, that is not your budget!

Make your forecast visible. Review it weekly.
Set monthly “money milestones” like:

• Reconcile last month by the 10th
• Compare forecast vs. actual weekly
• Adjust budgets as needed (your budget is ALWAYS a draft)

Small, consistent checkpoints keep tiny drifts from turning into big problems. Cash flow management is a habit, not a one-time event.

Common Traps to Avoid

• Averaging hides the truth: Use monthly budgets alongside your 12-month plan.
• Subscription creep: Little tools multiply and rob profit fast.
• Undercutting expense estimates: Estimate high, if it’s cheaper, great. But don’t bank on bargains.
• Overestimating profit: If you’re at 13% profit margin, don’t jump to 50% overnight. Build it intentionally so that your mindset has a chance to level up with your value.

Final Thoughts from Your Favorite Accountant 🧡

Your past numbers hold a story—and a strategy. It’s up to you whether you use them as a cheat code for cash flow or ignore them and hope for the best.

I don’t look at my numbers to dwell on what went wrong. I look to see what I want to do more of and that’s what I build my budget around.

If you’re ready to read your numbers as strategy, I can help:
✅ Hire us as your Bookkeeper to forecast, model, and manage your next twelve months with precision
👩‍💻 Join my Million Dollar Blueprint Masterclass to learn how to forecast with both data and intuition
📚 Grab my book + workbook on Amazon to DIY your own trend-based forecast

👉 Because at the end of the day, cash flow isn’t luck, it’s strategy.