February 28, 2024
Fathom’s new expanded five-year forecasting tools provide a long-term look into the future of your business and can help secure grants, loans, and other types of investments crucial to your success. This article breaks down our recent “Forecasting for Funding” webinar and covers why we built this feature, how to use it in Fathom, and why it’s valuable for businesses.
Funding is often critical to the future of a business or organisation. It can make the difference between expansion, success, or perhaps simply keeping the doors of a business open.
Over the years since we first debuted forecasting, we’ve received valuable feedback from our users including requests to expand the forecasting time range from three to five years to take a longer-term look at the future of a business or organisation.
Fathom’s new expanded five-year forecasting feature allows users to generate a more robust picture of the future. This feature can help them to secure the funding they need to move forward and to more accurately track long-term loans, debts, and plans for future success.
Five-year forecasting supercharges your forecasting power in Fathom. This is particularly useful for:
We’ll use a SaaS (subscription-as-a-service) company and a nonprofit organisation as examples to show you how five-year forecasting can be used in Fathom.
Users pay monthly subscription fees, so pricing and subscription numbers are critical metrics. This company uses five-year forecasting in Fathom to generate an accurate long-term view of the future of the business, and to secure critical investment funding without having long-term historical data to look back on.
Silver Cats Rescue & Sanctuary is a nonprofit organisation whose operations and activities are contingent on grant funding. This organisation uses five-year forecasting in Fathom to accurately reflect funding details and stay ahead of the curve by planning for different potential funding outcomes.
Creating a forecast in Fathom allows you to set a baseline and begin planning for the future.
There are three ways to get started with a forecast in Fathom:
Tip: Admin or Advisor-level Fathom users can launch the Forecasting Checklist and follow along to get started with forecasting.
The image below shows the main forecasting grid in Fathom. The chart of accounts is shown on the left, the forecast values for each account are shown in the middle and continue toward the right, and the quick metrics bar is shown toward the bottom of the screen to reflect the most important metrics for this organisation.
Forecasts are customisable and designed to adapt to your organisation; users determine how each account is forecast based on value rules.
Like many startups, Skeptic Early is particularly concerned with tracking and projecting their cash, so they know when they’ll run out and can make strategic decisions and stay afloat.
The quick metrics bar shows the immediate effects of any changes in your forecast, and gives instant insight into the movement of your most high-impact metrics. Skeptic Early tracks Cash on Hand as a quick metric to keep tabs on how changes to their forecast impact this crucial area.
Value rules are primarily centered on historical data. A startup like Skeptic doesn’t have a lot of historical data to use here so instead they’ll use drivers to set up the values in their forecast. Drivers are metrics outside of your financials that you want to use to drive or inform the forecast.
Fathom users can now create new forecasts with a five-year range. Users can also extend their existing forecasts from three to five years.
To do this, select the existing forecast within your Fathom account and then go to ‘Forecast Settings’ under the cog icon in the lower left. Under the ‘General’ tab you’ll see ‘Forecast Range.’ From here, select ‘Extend to five years.’
Any existing value rules that you’ve built into your forecast will simply be extended into the future, so you don’t need to recreate anything to expand your three-year forecast to five.
Note that expanded forecasts cannot be reverted from five to three years at this time, so consider this before extending your existing forecast.
A robust long-term forecast reveals a broader look into the future of a business or organisation. The insights uncovered here help inform the critical strategy decisions that impact the future of the business.
The five-year forecast may show that the business is profitable and has enough cash to carry out expansion plans. Or, the five-year forecast may show that expansion plans will require more cash and the business needs to investigate funding options.
Fathom allows you to understand the impacts of individual business decisions or events using microforecasts. Each microforecast contains a set of P&L and Balance Sheet movements that represent an event in the business and its financial impacts.
Since Skeptic Early is looking to raise equity, they use microforecasts to explore different investment outcomes. They're hopeful that funding will allow them to expand their team, so they may also use microforecasts to accurately forecast the impact of each new hire.
Once you’ve built the microforecasts most relevant to your organisation, use the business roadmap tool in Fathom to understand the impact of the timing of those potential business decisions and events. Drag your microforecasts across the business roadmap timeline and view the changes to your quick metrics toward the bottom of the screen. You can also use this tool to communicate and share these insights with other stakeholders.
Scenarios allow you to stay dynamic and explore “what if?” questions by creating different versions of your forecast.
For instance, a SAAS startup like Skeptic Early may need to model a “best case scenario” where they secure funding from all the venture capital investment firms that they pitch to, as well as a “worst case scenario” that helps them understand what their future looks like if none of this funding comes through.
A nonprofit organisation like Silver Cats Rescue & Sanctuary may need to understand the implications of taking on a new group of volunteers or securing a different amount of grant funding than in years past.
Fathom reports bring your forecast to life and allow you to share insights and plans with other stakeholders. Communicate, collaborate, and strategise together by incorporating your forecast into Fathom reports. Incorporate your forecast elements into your reports in Fathom using tables and financial statements and more visual components like charts.
You can choose from predefined forecast report templates in Fathom to get started, or start from scratch with a custom Fathom report. Learn more about reporting on your forecast here.
You can also download a sample report here.
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Check out our 'Forecasting for Funding' webinar for a walkthrough of this exciting new feature and how to use it.
Visit our Help Centre for more information on using five-year forecasting in your Fathom account.
Questions, comments, or feedback? We’d love to hear from you. Get in touch by sending an email to support@fathomhq.com.
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Rowan is the Head of Marketing & Partnerships for Fathom’s US team. Over her 5 years with Fathom she has worked with businesses, financial advisors, and firms of all shapes and sizes. She is passionate about shining a light on the ways that Fathom transforms relationships and improves outcomes for financial professionals and businesses. Rowan holds a Bachelor of Arts from Whittier College and has worked in relationship building in the technology space for the past eight years.
