How Do I Do a Business Projection?

Apr 19, 2019 by Roger Scherping

So, how do you do a business projection?

Business projections are an attempt to predict the future based on history and your insights. So you start with what happened in the past. You can get this information out of your accounting system. Assemble one year of monthly financial statements. This will be the basis for predicting the next 12 months.

Next you need a budget. Figure out your planned sales, expenses, and profit for the next year.

But a complete business projection also includes a balance sheet and the very important cash flow statement. So you also need to know your expected cash receipts and payments, inventory purchases, fixed asset purchases, loan advances and payments, and equity transactions.

This is where the management insight comes in. What are your plans for your business for the next 12 months? Think through the financial aspects of your business plans. What equipment do you need to buy? How much inventory will you need? What loan payments do you have to make?

The result will be a complete financial picture of your business 12 months in the future. Your business projection is your business’s crystal ball.

So, take control of your business! At ProjectionSmart, we can help.

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