By Chris Cooper
Founder, The Strategy Segment
In my experience, most leadership teams don’t suffer from a lack of ambition but from a lack of traction. They have ideas. They have intent. But without a clear financial lens, strategy gets lost in the fog of day-to-day decisions.
That’s where a three-way forecast - linking Profit & Loss, Cash Flow, and Balance Sheet, becomes
indispensable. It’s not just for accountants or banks. It’s a decision-making engine that turns bold plans into executable actions.
I worked with a WA-based business looking to grow revenue by 15% and expand into a new segment. Their team had energy - Sales was pushing forward, but Operations was already stretched, and Finance was raising red flags about cash.
We built a three-way forecast together. Within the day, they could see:
Suddenly, strategy wasn’t just a plan - it was a shared map with coordinated action. Sales, Operations,
and Finance were finally aligned.
A well-structured three-way forecast helps you:
It lets you stress-test assumptions: What if sales are delayed? What if input costs rise? What if we win that big contract? What if market traction is slower than we think?
The result? Less scrambling. More clarity. Better decisions.
In fast-moving markets, strategy can’t be static, it must be agile. That’s why I encourage teams to use the forecast quarterly, not just annually — tied to tactical game plans that reflect real-time market forces.
This builds rhythm:
And the MD knows the core team responsible for growing gross profit and cashflow is rowing in the same direction.
If your strategy isn't grounded in financial reality, it is just a wishlist.
A three-way forecast turns strategy into a shared, adaptive plan - one that fuels confidence, not confusion.
If your current forecast isn’t doing that, it’s time to upgrade your approach.
Chris Cooper is a Chartered Accountant and strategy facilitator. Through The Strategy Segment, he helps business owners align finance, operations, and sales to implement growth strategies that can deliver.
The self-assessment questionnaire below will help you to identify where you may be underutilising your three-way forecast as a decision-making tool. Purpose: Help business owners identify where they’re underutilising their three-way forecast as a strategic tool.
SECTION 1: Growth Planning
| Question |
Score 1 |
Score 3 |
Score 5 |
| Do you use forecasts to test whether growth plans are fundable and sustainable? |
We mostly rely on gut feel and past experience. |
We have budgets, but they’re not linked to cash or capacity. |
We simulate growth by linking revenue, cash, capacity, and timing. |
SECTION 2: Cash Flow Confidence
| Question |
Score 1 |
Score 3 |
Score 5 |
| Do you anticipate future cash constraints and plan for them? |
Cash surprises us - we often react late. |
We track cash flow, but not far ahead or with sensitivity. |
We can see upcoming gaps and adjust in advance using multiple levers. |
SECTION 3: Capacity Alignment
| Question |
Score 1 |
Score 3 |
Score 5 |
| Is your sales activity aligned with operational capacity? |
Sales pushes volume regardless of Ops capability. |
We manage delivery risks but lack long-range planning. |
We model capacity constraints inside the forecast to time growth and hiring. |
SECTION 4: Investment Readiness
| Question |
Score 1 |
Score 3 |
Score 5 |
| Do you use forecasting to assess and sequence investments (hiring, Capex, R&D)? |
We invest based on urgency or gut instinct. |
We compare costs, but not payback or financing needs. |
We test investment impact across P&L, cash, and balance sheet with “what ifs.” |
SECTION 5: Gross Profit Focus
| Question |
Score 1 |
Score 3 |
Score 5 |
| Do you track and forecast gross profit across segments, products, or clients? |
We focus on revenue and total expenses only. |
We see GP overall, but not per job/segment. |
GP is our central margin measure and informs pricing, quoting, and resourcing. |
SECTION 6: Team Integration
| Question |
Score 1 |
Score 3 |
Score 5 |
| Do Sales, Ops, and Finance use the forecast collaboratively? |
Forecasting is just a finance tool. |
We sometimes meet to review it. |
Forecasting is a shared planning tool for decisions and game plan reviews. |
Each range reflects a stage in how your business uses forecasting to guide decision-making and manage growth.
You’re flying blind. Forecasts are either absent or treated as a compliance exercise, not a decision-making tool. Key decisions rely
on gut feel or outdated assumptions. This increases the risk of cash crunches, underperforming investments, and misaligned resources.
Possible First Action: Start by building a forecast that connects your strategy to financial reality — and involve your Sales, Ops, and
Finance team in the process.
Common Weaknesses:
No clear link between strategic goals and financial forecasts.
Key spending or hiring decisions made without financial modelling.
Cash flow surprises cause reactive decision-making.
You’ve got a forecast, but it’s static or owned solely by Finance. It doesn’t drive conversations across the business. Risks are
spotted late, and you still rely heavily on assumptions or backward-looking data. You have the tool — but not the traction.
Possible First Action: Start using your forecast as a conversation driver in quarterly planning — focus on “what if” scenarios to guide
decisions and align teams.
Common Weaknesses:
Forecast owned only by Finance and not shared with Sales or Ops.
Scenario planning is minimal or not collaborative.
Teams work in silos — decisions are not financially coordinated.
Forecasting is part of your rhythm. Strategy, sales, operations, and finance all feed into a shared forecast — and it informs
decisions, not just reports on them. You’re adjusting plans in real time, not reacting after the fact.
Possible First Action: Now you can use forecasting to guide capacity planning, validate growth scenarios, and manage risk with control —
this is the engine room of confident execution.
Common Weaknesses:
Forecasting relies heavily on last year’s actuals with limited forward-thinking inputs.
Forecast is not updated when market or operational changes occur.
Lag between strategy decisions and model updates creates confusion.
