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Let's say a company occupies space in a market that generates an estimated $1,000,000,000 in revenue annually. If the business assumes it will have a market share of 2.5%, a top-down forecast would suggest that it will see $25,000,000 in revenue in the coming year.
To create an accurate financial projection, you can use an income statement that includes tax returns, assets, liabilities and forecasts for revenue and expenses. Market research can help determine revenue and expenses, and the rest of your project can come from personal financial information you already have.
How to create a sales forecast List the goods and services you sell. In a sales forecast, you'll want to account for each product or service that you are selling so your forecast is accurate. Quantify your sales. Each sales forecasting method has its own way of estimating future sales: ... Make adjustments. ... Subtract costs.
Pro forma income statement allows startups to create a hypothetical projection of your income and expenses. The foundation of a pro forma income statement focuses on various assumptions to make accurate quarterly or annual projections of revenue and expenses.
How to do financial forecasting in 7 steps Define the purpose of a financial forecast. ... Gather past financial statements and historical data. ... Choose a time frame for your forecast. ... Choose a financial forecast method. ... Document and monitor results. ... Analyze financial data. ... Repeat based on the previously defined time frame.