Estimating how much money will come in over a future period using sales data. Planning ahead gives a clearer picture of the company’s financial health.
What to consider
Base projections on realistic assumptions.
Consider best and worst-case scenarios.
Update projections regularly.
Real world scenarios
A startup in Austin created a three-year projection of revenue and expenses to attract investors.
An entrepreneur in Denver modeled future cash flows to plan for a new product launch.
A small firm prepared detailed financial projections before applying for a bank loan.