Proper financial forecasts will help you develop operational and staffing plans, hone down the most effective business model and make your company look more attractive to investors.
Here are 3 primary points you should ponder when forecasting your business for ultimate growth that should be revisited monthly, quarterly, and yearly for maximum sufficiency in conjunction with your business plan.
- Itemize fixed and variable costs plus overhead expenses first. Start with expenses, not revenues while leaving ‘padding’ for the costs of labor, licensing fees, insurance, legal expenses, marketing and advertising
- Create two sets of forecasts: conservative (think smart) and ambitious (think big).
- Understand the ratios that reconcile revenue and expense projections:
Gross margin = Total Direct Costs compared to Total Revenues
Operating profit margin = Total Operating Costs compared to Total Revenue (-financial costs)
Total accounts in comparison to each employee
For more details on growth forecasting for your startup or existing business, I am facilitating consultations to discuss your specific needs.
Schedule your free consultation for you and your team at JeffreyLevine.Solutions today.