Definition

Estimating how much money one customer will bring over their whole time with your business. A higher value means each customer is a good investment.

What to consider

  • Regularly update your forecasts.
  • Factor in seasonal variations.
  • Plan for unexpected expenses.

Real world scenarios

  • A small business prepares a monthly forecast to anticipate cash shortages during slow seasons.
  • An entrepreneur uses previous years’ data to project future cash inflows and outflows.
  • A retail store reviews cash flow forecasts before launching new promotional campaigns.

Related terms

Entrepreneurial Finances