Early forecasts fail when they start from a target instead of a mechanism. Work forwards from what actually produces revenue and the model becomes far easier to test and correct.
Build from drivers
Break revenue into the smallest repeatable unit: enquiries, conversion rate, average value and frequency. Change one driver and you can see exactly what it does to cash.
Respect the timing of cash
Profit and cash are not the same thing. Payment terms, deposits, VAT and stock cycles decide whether a profitable month leaves you comfortable or short.
Review monthly
A forecast is a live document. Compare actuals against the model each month, adjust the drivers that were wrong, and keep a short written note of why. After six months you will forecast far more accurately than any template can.
The information provided on this website is for general guidance only and does not constitute financial, legal or accounting advice, nor a guarantee of any particular business outcome. Results depend on individual circumstances, market conditions and how recommendations are implemented. Professional advice should be obtained where appropriate.
