{"id":2878,"date":"2018-08-22T15:43:35","date_gmt":"2018-08-22T12:43:35","guid":{"rendered":"https:\/\/www.lending-express.com\/blog\/?p=2878"},"modified":"2019-08-19T15:14:33","modified_gmt":"2019-08-19T12:14:33","slug":"how-to-forecast-your-business-revenue-and-growth","status":"publish","type":"post","link":"https:\/\/www.become.co\/blog\/how-to-forecast-your-business-revenue-and-growth\/","title":{"rendered":"How to Forecast Your Business Revenue and Growth"},"content":{"rendered":"

Keeping your business\u2019s monthly revenue growing and in check was never going to be easy. <\/span><\/p>\n

We all know that budgeting is key to keeping your business on track but how exactly do you make those tough budgeting decisions without knowing your future revenue?<\/span><\/p>\n

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We all wish we had a crystal ball to peer into the future, but there are ways to relatively accurately estimate and predict your monthly revenue so that you can keep your spending in check. Business forecasting your revenue will allow you to figure out your profit margin and how much money to spend but it doesn\u2019t come without its challenges. Here we\u2019ll take you through how to forecast revenue and growth\u2026.<\/span><\/p>\n

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What is forecasting?<\/span><\/h2>\n

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Business forecasting methods involve making future predictions of both past and present data for your business\u2019s future. This can be used to make valuable predictions on things like inventory requirements, future sales and consumer trends. Pretty handy huh!?<\/span><\/p>\n

How to forecast revenue:<\/span><\/h2>\n

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There are two main types of revenue forecasting:<\/span><\/p>\n

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Judgment forecasting<\/b> – this uses your gut feeling based off of your experience and intuition in the industry. <\/span><\/p>\n

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Quantitative forecasting<\/b> – this scientific method uses your past data and revenue (or if you\u2019re a startup, then data from similar businesses) to predict changes and track trends.  <\/span><\/p>\n

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Overall, it\u2019s best to use a combination of the two but your business forecasting techniques will vary depending on whether you are a well-established business with a long history or a newbie. <\/span><\/p>\n

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How to forecast revenue for established businesses:<\/span><\/h2>\n


\n<\/span>The most logical move is to use your last year\u2019s revenue statements. Make sure to also take into considerations things like; pricing, competition, personnel etc. To make get an even more accurate forecast, you could try separating income sources such as online vs offline sales, or sales from different product lines and merchants so that you can more accurately see the ups and downs from each revenue stream.<\/span>
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\n<\/span>Make sure to do this on a monthly basis, rather than once a year (or at the very least, quarterly). This way the task becomes much easier at the end of the year and you can accurately keep track of all your revenue streams to better your future predictions and budget management. Better yet, by effectively using forecasting, you\u2019ll be able to figure out at what point in the year it may be ideal to take out <\/span>small business loans<\/a>.<\/span><\/p>\n

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How to forecast revenue for startups: <\/span><\/h2>\n

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Startup business forecasting is a challenging process namely because very new businesses will lack the useful data that more established businesses have to work. This is where judgment forecasting comes into play. <\/span><\/p>\n

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When it comes to starting off your business forecasting methods, it\u2019s best to start with expenses and <\/span>not <\/span><\/i>revenues. <\/span><\/p>\n

Estimate the following:<\/span><\/h3>\n
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  1. Fixed costs <\/b>– rent, bills, bookkeeping, legal fees, insurance, marketing, salaries, postage and any other fixed bills you may have. <\/span><\/li>\n
  2. Variable costs <\/b>– the cost of goods sold, direct labor costs, materials and supplies, packaging etc. (this will, of course, vary depending on your industry)<\/span><\/li>\n<\/ol>\n

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    When it comes to startups, it\u2019s always best to <\/span>overestimate <\/span><\/i>when forecasting expenses in this way. <\/span>
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    \n<\/span>Here are some tips you should take into consideration:<\/b><\/p>\n