revenue forecast

5 Reasons You Need a Revenue Forecast

Creating a revenue forecast for your company may seem like a bit of a pointless chore when you’re just starting out and there is little revenue to count, however, the truth is that revenue forecasts are something every successful small business does.

While it might be a little hard to do if you’re running a newer business because there won’t be any historical data available, you can still make a decent forecast by making figures as realistic as possible and altering them as needed in the future.

If you’re still not sure about doing a revenue forecast, here are a few reasons why it’s so important.

1. It’s how you look back

Once you’ve begun revenue forecasting, you’re creating a record of historical data that can be invaluable to you in the future. With previous forecasts, you can take an objective look at your market and account for seasonal peaks, micro-trends and other fluctuations so you know when it’s okay to take risks and when you should be focusing on saving money. Previous forecasts can help you see when you need to step back and when you can safely make some bigger moves.

2. It’s part of your business blueprint

You can use a forecast to plan for how fast your company can actually grow. This will help you decide when to take crucial steps, including moving to a new space, creating new marketing strategies and hiring some staff or expanding your current team. An accurate forecast can be a lifesaver as it can prevent you from making mistakes when it comes to areas such as resource allocation and let you take advantage of available opportunities.

3. It’s how you budget

With a revenue forecast, you can take your risks and costs into account. This allows you to create realistic budgets for your variable expenses and fixed overheads. Budgeting is the lifeblood of any successful business, so the revenue forecast is a critical component of your plan.

4. It will enthuse investors

It may take a while for your business to get to this point, but as your business grows its smart to keep an eye towards the long term future.

Investors are simply more excited about putting their money towards a company that has a realistic idea of the risks and expenses involved. A successful business owner will often use these forecasts to show that he or she is completely serious about the financial well being of their company and have their fingers on the pulse of all aspects of the business.

5. It leads to a strategic marketing plan

Once you have completed your revenue forecast, and have predicted how much of each product you are going to sell for how much over the course of time, what happens next is critical. Something interesting happens, your mind immediately starts thinking – well how the heck am I going to do that? How am I going to sell 25 of my ebooks, 10 webinars, 2 of my midrange products and 1 of my bottom of the product funnel high end products next month? Yikes!!

The answer comes by way of your strategic written down marketing plan. More on that in another blog…

Draft your revenue forecast today so you can see where your business is and where it might be headed. A little planning and forecasting can go a long way, and that’s certainly true in the world of business ownership.

Try our Revenue Forecasting Template and get started forecasting today!


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