Everything that you need to know to start your own business. From business ideas to researching the competition.

Practical and real-world advice on how to run your business — from managing employees to keeping the books

Our best expert advice on how to grow your business — from attracting new customers to keeping existing customers happy and having the capital to do it.

Entrepreneurs and industry leaders share their best advice on how to take your company to the next level.

  • Business Ideas
  • Human Resources
  • Business Financing
  • Growth Studio
  • Ask the Board

Looking for your local chamber?

Interested in partnering with us?

Run » finance, how to create a financial forecast for a startup business plan.

Financial forecasting allows you to measure the progress of your new business by benchmarking performance against anticipated sales and costs.

 A man uses a calculator with a pen and notebook on his desk.

When starting a new business, a financial forecast is an important tool for recruiting investors as well as for budgeting for your first months of operating. A financial forecast is used to predict the cash flow necessary to operate the company day-to-day and cover financial liabilities.

Many lenders and investors ask for a financial forecast as part of a business plan; however, with no sales under your belt, it can be tricky to estimate how much money you will need to cover your expenses. Here’s how to begin creating a financial forecast for a new business.

[Read more: Startup 2021: Business Plan Financials ]

Start with a sales forecast

A sales forecast attempts to predict what your monthly sales will be for up to 18 months after launching your business. Creating a sales forecast without any past results is a little difficult. In this case, many entrepreneurs make their predictions using industry trends, market analysis demonstrating the population of potential customers and consumer trends. A sales forecast shows investors and lenders that you have a solid understanding of your target market and a clear vision of who will buy your product or service.

A sales forecast typically breaks down monthly sales by unit and price point. Beyond year two of being in business, the sales forecast can be shown quarterly, instead of monthly. Most financial lenders and investors like to see a three-year sales forecast as part of your startup business plan.

Lower fixed costs mean less risk, which might be theoretical in business schools but are very concrete when you have rent and payroll checks to sign.

Tim Berry, president and founder of Palo Alto Software

Create an expenses budget

An expenses budget forecasts how much you anticipate spending during the first years of operating. This includes both your overhead costs and operating expenses — any financial spending that you anticipate during the course of running your business.

Most experts recommend breaking down your expenses forecast by fixed and variable costs. Fixed costs are things such as rent and payroll, while variable costs change depending on demand and sales — advertising and promotional expenses, for instance. Breaking down costs into these two categories can help you better budget and improve your profitability.

"Lower fixed costs mean less risk, which might be theoretical in business schools but are very concrete when you have rent and payroll checks to sign," Tim Berry, president and founder of Palo Alto Software, told Inc . "Most of your variable costs are in those direct costs that belong in your sales forecast, but there are also some variable expenses, like ads and rebates and such."

Project your break-even point

Together, your expenses budget and sales forecast paints a picture of your profitability. Your break-even projection is the date at which you believe your business will become profitable — when more money is earned than spent. Very few businesses are profitable overnight or even in their first year. Most businesses take two to three years to be profitable, but others take far longer: Tesla , for instance, took 18 years to see its first full-year profit.

Lenders and investors will be interested in your break-even point as a projection of when they can begin to recoup their investment. Likewise, your CFO or operations manager can make better decisions after measuring the company’s results against its forecasts.

[Read more: ​​ Startup 2021: Writing a Business Plan? Here’s How to Do It, Step by Step ]

Develop a cash flow projection

A cash flow statement (or projection, for a new business) shows the flow of dollars moving in and out of the business. This is based on the sales forecast, your balance sheet and other assumptions you’ve used to create your expenses projection.

“If you are starting a new business and do not have these historical financial statements, you start by projecting a cash-flow statement broken down into 12 months,” wrote Inc . The cash flow statement will include projected cash flows from operating, investing and financing your business activities.

Keep in mind that most business plans involve developing specific financial documents: income statements, pro formas and a balance sheet, for instance. These documents may be required by investors or lenders; financial projections can help inform the development of those statements and guide your business as it grows.

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

Follow us on Instagram for more expert tips & business owners’ stories.

Applications are open for the CO—100! Now is your chance to join an exclusive group of outstanding small businesses. Share your story with us — apply today .

CO—is committed to helping you start, run and grow your small business. Learn more about the benefits of small business membership in the U.S. Chamber of Commerce, here .

Apply for the CO—100!

The CO—100 is an exclusive list of the 100 best and brightest small and mid-sized businesses in America. Enter today to share your story and get recognized.

Subscribe to our newsletter, Midnight Oil

Expert business advice, news, and trends, delivered weekly

By signing up you agree to the CO— Privacy Policy. You can opt out anytime.

For more finance tips

A guide to understanding credit card processing, what are fifo and lifo, what is ai price optimization.

By continuing on our website, you agree to our use of cookies for statistical and personalisation purposes. Know More

Welcome to CO—

Designed for business owners, CO— is a site that connects like minds and delivers actionable insights for next-level growth.

U.S. Chamber of Commerce 1615 H Street, NW Washington, DC 20062

Social links

Looking for local chamber, stay in touch.

How to Write a Small Business Financial Plan

Stairs leading up to a dollar sign. Represents creating a financial plan to achieve profitability.

Noah Parsons

4 min. read

Updated April 22, 2024

Download Now: Free Income Statement Template →

Creating a financial plan is often the most intimidating part of writing a business plan.

It’s also one of the most vital. Businesses with well-structured and accurate financial statements are more prepared to pitch to investors, receive funding, and achieve long-term success.

Thankfully, you don’t need an accounting degree to successfully create your budget and forecasts.

Here is everything you need to include in your financial plan, along with optional performance metrics, funding specifics, mistakes to avoid , and free templates.

  • Key components of a financial plan

A sound financial plan is made up of six key components that help you easily track and forecast your business financials. They include your:

Sales forecast

What do you expect to sell in a given period? Segment and organize your sales projections with a personalized sales forecast based on your business type.

Subscription sales forecast

While not too different from traditional sales forecasts—there are a few specific terms and calculations you’ll need to know when forecasting sales for a subscription-based business.

Expense budget

Create, review, and revise your expense budget to keep your business on track and more easily predict future expenses.

How to forecast personnel costs

How much do your current, and future, employees’ pay, taxes, and benefits cost your business? Find out by forecasting your personnel costs.

Profit and loss forecast

Track how you make money and how much you spend by listing all of your revenue streams and expenses in your profit and loss statement.

Cash flow forecast

Manage and create projections for the inflow and outflow of cash by building a cash flow statement and forecast.

Balance sheet

Need a snapshot of your business’s financial position? Keep an eye on your assets, liabilities, and equity within the balance sheet.

What to include if you plan to pursue funding

Do you plan to pursue any form of funding or financing? If the answer is yes, then there are a few additional pieces of information that you’ll need to include as part of your financial plan.

Highlight any risks and assumptions

Every entrepreneur takes risks with the biggest being assumptions and guesses about the future. Just be sure to track and address these unknowns in your plan early on.

Plan your exit strategy

Investors will want to know your long-term plans as a business owner. While you don’t need to have all the details, it’s worth taking the time to think through how you eventually plan to leave your business.

  • Financial ratios and metrics

With your financial statements and forecasts in place, you have all the numbers needed to calculate insightful financial ratios.

While including these metrics in your plan is entirely optional, having them easily accessible can be valuable for tracking your performance and overall financial situation.

Key financial terms you should know

It’s not hard. Anybody who can run a business can understand these key financial terms. And every business owner and entrepreneur should know them.

Common business ratios

Unsure of which business ratios you should be using? Check out this list of key financial ratios that bankers, financial analysts, and investors will want to see.

Break-even analysis

Do you want to know when you’ll become profitable? Find out how much you need to sell to offset your production costs by conducting a break-even analysis.

How to calculate ROI

How much could a business decision be worth? Evaluate the efficiency or profitability by calculating the potential return on investment (ROI).

  • How to improve your financial plan

Your financial statements are the core part of your business plan that you’ll revisit most often. Instead of worrying about getting it perfect the first time, check out the following resources to learn how to improve your projections over time.

Common mistakes with business forecasts

I was glad to be asked about common mistakes with startup financial projections. I read about 100 business plans per year, and I have this list of mistakes.

How to improve your financial projections

Learn how to improve your business financial projections by following these five basic guidelines.

Brought to you by

LivePlan Logo

Create a professional business plan

Using ai and step-by-step instructions.

Secure funding

Validate ideas

Build a strategy

  • Financial plan templates and tools

Download and use these free financial templates and calculators to easily create your own financial plan.

financial outlook in business plan

Sales forecast template

Download a free detailed sales forecast spreadsheet, with built-in formulas, to easily estimate your first full year of monthly sales.

Download Template

financial outlook in business plan

Accurate and easy financial forecasting

Get a full financial picture of your business with LivePlan's simple financial management tools.

Get Started

Content Author: Noah Parsons

Noah is the COO at Palo Alto Software, makers of the online business plan app LivePlan. He started his career at Yahoo! and then helped start the user review site Epinions.com. From there he started a software distribution business in the UK before coming to Palo Alto Software to run the marketing and product teams.

Check out LivePlan

Table of Contents

  • What to include for funding

Related Articles

financial outlook in business plan

10 Min. Read

How to Write the Company Overview for a Business Plan

The 10 AI Prompts You Need to Write a Business Plan

24 Min. Read

The 10 AI Prompts You Need to Write a Business Plan

financial outlook in business plan

How to Set and Use Milestones in Your Business Plan

financial outlook in business plan

How to Write a Competitive Analysis for Your Business Plan

The Bplans Newsletter

The Bplans Weekly

Subscribe now for weekly advice and free downloadable resources to help start and grow your business.

We care about your privacy. See our privacy policy .

Garrett's Bike Shop

The quickest way to turn a business idea into a business plan

Fill-in-the-blanks and automatic financials make it easy.

No thanks, I prefer writing 40-page documents.

LivePlan pitch example

Discover the world’s #1 plan building software

financial outlook in business plan

Hot Summer Savings ☀️ 60% Off for 4 Months. BUY NOW & SAVE

60% Off for 4 Months Buy Now & Save

Wow clients with professional invoices that take seconds to create

Quick and easy online, recurring, and invoice-free payment options

Automated, to accurately track time and easily log billable hours

Reports and tools to track money in and out, so you know where you stand

Easily log expenses and receipts to ensure your books are always tax-time ready

Tax time and business health reports keep you informed and tax-time ready

Automatically track your mileage and never miss a mileage deduction again

Time-saving all-in-one bookkeeping that your business can count on

Track project status and collaborate with clients and team members

Organized and professional, helping you stand out and win new clients

Set clear expectations with clients and organize your plans for each project

Client management made easy, with client info all in one place

Pay your employees and keep accurate books with Payroll software integrations

  • Team Management

FreshBooks integrates with over 100 partners to help you simplify your workflows

Send invoices, track time, manage payments, and more…from anywhere.

  • Freelancers
  • Self-Employed Professionals
  • Businesses With Employees
  • Businesses With Contractors
  • Marketing & Agencies
  • Construction & Trades
  • IT & Technology
  • Business & Prof. Services
  • Accounting Partner Program
  • Collaborative Accounting™
  • Accountant Hub
  • Reports Library
  • FreshBooks vs QuickBooks
  • FreshBooks vs HoneyBook
  • FreshBooks vs Harvest
  • FreshBooks vs Wave
  • FreshBooks vs Xero
  • Free Invoice Generator
  • Invoice Templates
  • Accounting Templates
  • Business Name Generator
  • Estimate Templates
  • Help Center
  • Business Loan Calculator
  • Mark Up Calculator

Call Toll Free: 1.866.303.6061

1-888-674-3175

  • All Articles
  • Productivity
  • Project Management
  • Bookkeeping

Resources for Your Growing Business

How to make financial projections for business.

How to Make Financial Projections for Business

Writing a solid business plan should be the first step for any business owner looking to create a successful business. 

As a small business owner, you will want to get the attention of investors, partners, or potential highly skilled employees. It is, therefore, important to have a realistic financial forecast incorporated into your business plan. 

We’ll break down a financial projection and how to utilize it to give your business the best start possible.

Key Takeaways

Accurate financial projections are essential for businesses to succeed. In this article, we’ll explain everything you need to know about creating financial projections for your business. Here’s what you need to know about financial projections:

  • A financial projection is a group of financial statements that are used to forecast future performance
  • Creating financial projections can break down into 5 simple steps: sales projections, expense projections, balance sheet projections, income statement projections, and cash flow projections
  • Financial projections can offer huge benefits to your business, including helping with forecasting future performance, ensuring steady cash flow, and planning key moves around the growth of the business

Here’s What We’ll Cover:

What Is a Financial Projection?

How to Create a Financial Projection

What goes into a financial projection, what are financial projections used for.

Financial Projections Advantages

Frequently Asked Questions

What Is Financial Projection?

A financial projection is essentially a set of financial statements . These statements will forecast future revenues and expenses. 

Any projection includes your cash inflows and outlays, your general income, and your balance sheet. 

They are perfect for showing bankers and investors how you plan to repay business loans. They also show what you intend to do with your money and how you expect your business to grow. 

Most projections are for the first 3-5 years of business, but some include a 10-year forecast too.

Either way, you will need to develop a short and mid-term projection broken down month by month. 

As you are just starting out with your business, you won’t be expected to provide exact details. Most financial projections are rough guesses. But they should also be educated guesses based on market trends, research, and looking at similar businesses. 

It’s incredibly important for financial statements to be realistic. Most investors will be able to spot a fanciful projection from a mile away. 

In general, most people would prefer to be given realistic projections, even if they’re not as impressive.

Today's Numbers Tomorrow's Growth

Financial projections are created to help business owners gain insight into the future of their company’s financials. 

The question is, how to create financial projections? For business plan purposes, it’s important that you follow the best practices of financial projection closely. This will ensure you get accurate insight, which is vital for existing businesses and new business startups alike.

Here are the steps for creating accurate financial projections for your business.

1. Start With A Sales Projection

For starters, you’ll need to project how much your business will make in sales. If you’re creating a sales forecast for an existing business, you’ll have past performance records to project your next period. Past data can provide useful information for your financial projection, such as if your sales do better in one season than another.

Be sure also to consider external factors, such as the economy at large, the potential for added tariffs and taxes in the future, supply chain issues, or industry downturns. 

The process is almost the same for new businesses, only without past data to refer to. Business startups will need to do more research on their industry to gain insight into potential future sales.

2. Create Your Expense Projection

Next, create an expense projection for your business. In a sense, this is an easier task than a sales projection since it seems simpler to predict your own behaviors than your customers. However, it’s vital that you expect the unexpected.

Optimism is great, but the worst-case scenario must be considered and accounted for in your expense projection. From accidents in the workplace to natural disasters, rising trade prices, to unexpected supply disruptions, you need to consider these large expenses in your projection. 

Something always comes up, so we suggest you add a 10-15% margin on your expense projection.

3. Create Your Balance Sheet Projection

A balance sheet projection is used to get a clear look at your business’s financial position related to assets, liabilities , and equity, giving you a more holistic view of the company’s overall financial health. 

For startup businesses, this can prove to be a lot of work since you won’t have existing records of past performance to pull from. This will need to be factored into your industry research to create an accurate financial projection.

For existing businesses, it will be more straightforward. Use your past and current balance sheets to predict your business’s position in the next 1-3 years. If you use a cloud-based, online accounting software with the feature to generate balance sheets, such as the one offered by FreshBooks, you’ll be able to quickly create balance sheets for your financial projection within the app.

Click here to learn more about the features of FreshBooks accounting software.

FreshBooks accounting software

4. Make Your Income Statement Projection

Next up, create an income statement projection. An income statement is used to declare the net income of a business after all expenses have been made. In other words, it states the profits of a business.

For currently operating businesses, you can use your past income statements and the changes between them to create accurate predictions for the next 1-3 years. You can also use accounting software to generate your income statements automatically. 

You’ll need to work on rough estimates for new businesses or those still in the planning phase. It’s vital that you stay realistic and do your utmost to create an accurate, good-faith projection of future income. 

5. Finally, Create Your Cash Flow Projection

Last but not least is to generate your projected cash flow statement. A cash flow projection forecasts the movement of all money to and from your business. It’s intertwined with a business’s balance sheet and income statement, which is no different when creating projections. 

If your business has been operating for six months or more, you can create a fairly accurate cash flow projection with your past cash flow financial statements. For new businesses, you’ll need to factor in this step of creating a financial forecast when doing your industry research. 

It needs to include five elements to ensure an accurate, useful financial forecast for your business. These financial statements come together to provide greater insight into the projected future of a business’s financial health. These include:

Income Statement

A standard income statement summarizes your company’s revenues and expenses over a period. This is normally done either quarterly or annually.

The income statement is where you will do the bulk of your forecasting. 

On any income statement, you’re likely to find the following:

  • Revenue: Your revenue earned through sales. 
  • Expenses: The amount you’ve spent, including your product costs and your overheads.
  • Pre-Tax Earnings: This is your income before you’ve paid tax.
  • Net Income: The total revenues minus your total expenses. 

Net income is the most important number. If the number is positive, then you’re earning a profit, if it’s negative, it means your expenses outweigh your revenue and you’re making a loss. 

Cash Flow Statement

Your cash flow statement will show any potential investor whether you are a good credit risk. It also shows them if you can successfully repay any loans you are granted.

You can break a cash flow statement into three parts:

  • Cash Revenues: An overview of your calculated cash sales for a given time period. 
  • Cash Disbursements: You list all the cash expenditures you expect to pay.
  • Net Cash Revenue: Take the cash revenues minus your cash disbursements.

cash flow statement

Balance Sheet

Your balance sheet will show your business’s net worth at a given time.

A balance sheet is split up into three different sections:

  • Assets: An asset is a tangible object of value that your company owns. It could be things like stock or property such as warehouses or offices. 
  • Liabilities: These are any debts your business owes.
  • Equity: Your equity is the summary of your assets minus your liabilities.

Balance Sheet

Looking for an easy-to-use yet capable online accounting software? FreshBooks accounting software is a cloud-based solution that makes financial projections simple. With countless financial reporting features and detailed guides on creating accurate financial forecasts, FreshBooks can help you gain the insight you need to let your business thrive. Click here to give FreshBooks a try for free.

FreshBooks accounting software features

Financial projections have many uses for current business owners and startup entrepreneurs. Provided your financial forecasting follows the best practices for an accurate projection, your data will be used for:

  • Internal planning and budgeting – Your finances will be the main factor in whether or not you’ll be able to execute your business plan to completion. Financial projections allow you to make it happen.
  • Attracting investors and securing funding – Whether you’re receiving financing from bank loans, investors, or both, an accurate projection will be essential in receiving the funds you need.
  • Evaluating business performance and identifying areas for improvement – Financial projections help you keep track of your business’s financial health, allowing you to plan ahead and avoid unwelcome surprises.
  • Making strategic business decisions – Timing is important in business, especially when it comes to major expenditures (new product rollouts, large-scale marketing, expansion, etc.). Financial projections allow you to make an informed strategy for these big decisions.

Financial Projections Advantages 

Creating clear financial projections for your business startup or existing company has countless benefits. Focusing on creating (and maintaining) good financial forecasting for your business will:

  • Help you make vital financial decisions for the business in the future
  • Help you plan and strategize for growth and expansion
  • Demonstrate to bankers how you will repay your loans 
  • Demonstrate to investors how you will repay financing
  • Identify your most essential financing needs in the future
  • Assist in fine-tuning your pricing
  • Be helpful when strategizing your production plan
  • Be a useful tool for planning your major expenditures strategically
  • Help you keep an eye on your cash flow for the future

Put Your Books On Autopilot

Your financial forecast is an essential part of your business plan, whether you’re still in the early startup phases or already running an established business. However, it’s vital that you follow the best practices laid out above to ensure you receive the full benefits of comprehensive financial forecasting.  

If you’re looking for a useful tool to save time on the administrative tasks of financial forecasting, FreshBooks can help. With the ability to instantly generate the reports you need and get a birds-eye-view of your business’s past performance and overall financial help, it will be easier to create useful financial projections that provide insight into your financial future. 

FAQs on Financial Projections

More questions about financial forecasting, projections, and how these processes fit into your business plan? Here are some frequently asked questions by business owners.

Why are financial projections important?

Financial projections allow you to gain insight into your business’s economic trajectory. This helps business owners make financial decisions, secure funding, and more. Additionally, financial projections provide early warning of roadblocks and challenges that may lay ahead for the company, making it easier to plan for a clear course of action.

What is an example of a financial projection?

A projection is an overall look at a business’s forecasted performance. It’s made up of several different statements and reports, such as a cash flow statement, income statement, profit and loss statement, and sales statement. You can find free templates and examples of many of these reports via FreshBooks. Click here to view our selection of accounting templates.

Are financial forecasts and financial projections the same?

Technically, there is a difference between forecasting and projections, though many use the terms interchangeably. Financial forecasting often refers to shorter-term (<1 year) predictions of financial performance, while financial projections usually focus on a larger time scale (2-3 years).

What is the most widely used method for financial forecasting?

The most common method of accurate forecasting is the straight-line forecasting method. It’s most often used for projecting the growth of a business’s revenue growth over a set period. If you notice that your records indicate a 4% growth of revenue per year for five years running, it would be reasonable to assume that this will continue year-over-year. 

What is the purpose of a financial projection?

Projection aims to get deeper, more nuanced insight into a business’s financial health and viability. It allows business owners to anticipate expenses and profit growth, giving them the tools to secure funding and loans and strategize major business decisions. It’s an essential accounting process that all business owners should prioritize in their business plans.

financial outlook in business plan

Michelle Alexander, CPA

About the author

Michelle Alexander is a CPA and implementation consultant for Artificial Intelligence-powered financial risk discovery technology. She has a Master's of Professional Accounting from the University of Saskatchewan, and has worked in external audit compliance and various finance roles for Government and Big 4. In her spare time you’ll find her traveling the world, shopping for antique jewelry, and painting watercolour floral arrangements.

RELATED ARTICLES

5 Best Mileage Tracker App for Small Businesses

Save Time Billing and Get Paid 2x Faster With FreshBooks

Want More Helpful Articles About Running a Business?

Get more great content in your Inbox.

By subscribing, you agree to receive communications from FreshBooks and acknowledge and agree to FreshBook’s Privacy Policy . You can unsubscribe at any time by contacting us at [email protected].

👋 Welcome to FreshBooks

To see our product designed specifically for your country, please visit the United States site.

  • Search Search Please fill out this field.
  • Building Your Business
  • Becoming an Owner
  • Business Plans

Writing a Business Plan—Financial Projections

Spell out your financial forecast in dollars and sense

Creating financial projections for your startup is both an art and a science. Although investors want to see cold, hard numbers, it can be difficult to predict your financial performance three years down the road, especially if you are still raising seed money. Regardless, short- and medium-term financial projections are a required part of your business plan if you want serious attention from investors.

The financial section of your business plan should include a sales forecast , expenses budget , cash flow statement , balance sheet , and a profit and loss statement . Be sure to follow the generally accepted accounting principles (GAAP) set forth by the Financial Accounting Standards Board , a private-sector organization responsible for setting financial accounting and reporting standards in the U.S. If financial reporting is new territory for you, have an accountant review your projections.

Sales Forecast

As a startup business, you do not have past results to review, which can make forecasting sales difficult. It can be done, though, if you have a good understanding of the market you are entering and industry trends as a whole. In fact, sales forecasts based on a solid understanding of industry and market trends will show potential investors that you've done your homework and your forecast is more than just guesswork.

In practical terms, your forecast should be broken down by monthly sales with entries showing which units are being sold, their price points, and how many you expect to sell. When getting into the second year of your business plan and beyond, it's acceptable to reduce the forecast to quarterly sales. In fact, that's the case for most items in your business plan.

Expenses Budget

What you're selling has to cost something, and this budget is where you need to show your expenses. These include the cost to your business of the units being sold in addition to overhead. It's a good idea to break down your expenses by fixed costs and variable costs. For example, certain expenses will be the same or close to the same every month, including rent, insurance, and others. Some costs likely will vary month by month such as advertising or seasonal sales help.

Cash Flow Statement

As with your sales forecast, cash flow statements for a startup require doing some homework since you do not have historical data to use as a reference. This statement, in short, breaks down how much cash is coming into your business on a monthly basis vs. how much is going out. By using your sales forecasts and your expenses budget, you can estimate your cash flow intelligently.

Keep in mind that revenue often will trail sales, depending on the type of business you are operating. For example, if you have contracts with clients, they may not be paying for items they purchase until the month following delivery. Some clients may carry balances 60 or 90 days beyond delivery. You need to account for this lag when calculating exactly when you expect to see your revenue.

Profit and Loss Statement

Your P&L statement should take the information from your sales projections, expenses budget, and cash flow statement to project how much you expect in profits or losses through the three years included in your business plan. You should have a figure for each individual year as well as a figure for the full three-year period.

Balance Sheet

You provide a breakdown of all of your assets and liabilities in the balances sheet. Many of these assets and liabilities are items that go beyond monthly sales and expenses. For example, any property, equipment, or unsold inventory you own is an asset with a value that can be assigned to it. The same goes for outstanding invoices owed to you that have not been paid. Even though you don't have the cash in hand, you can count those invoices as assets. The amount you owe on a business loan or the amount you owe others on invoices you've not paid would count as liabilities. The balance is the difference between the value of everything you own vs. the value of everything you owe.

Break-Even Projection

If you've done a good job projecting your sales and expenses and inputting the numbers into a spreadsheet, you should be able to identify a date when your business breaks even—in other words, the date when you become profitable, with more money coming in than going out. As a startup business, this is not expected to happen overnight, but potential investors want to see that you have a date in mind and that you can support that projection with the numbers you've supplied in the financial section of your business plan.

Additional Tips

When putting together your financial projections, keep some general tips in mind:

  • Get comfortable with spreadsheet software if you aren't already. It is the starting point for all financial projections and offers flexibility, allowing you to quickly change assumptions or weigh alternative scenarios. Microsoft Excel is the most common, and chances are you already have it on your computer. You can also buy special software packages to help with financial projections.
  • Prepare a five-year projection . Don’t include this one in the business plan, since the further into the future you project, the harder it is to predict. However, have the projection available in case an investor asks for it.
  • Offer two scenarios only . Investors will want to see a best-case and worst-case scenario, but don’t inundate your business plan with myriad medium-case scenarios. They likely will just cause confusion.
  • Be reasonable and clear . As mentioned before, financial forecasting is as much art as science. You’ll have to assume certain things, such as your revenue growth, how your raw material and administrative costs will grow, and how effective you’ll be at collecting on accounts receivable. It’s best to be realistic in your projections as you try to recruit investors. If your industry is going through a contraction period and you’re projecting revenue growth of 20 percent a month, expect investors to see red flags.

What's Planergy?

Modern Spend Management and Accounts Payable software.

Helping organizations spend smarter and more efficiently by automating purchasing and invoice processing.

We saved more than $1 million on our spend in the first year and just recently identified an opportunity to save about $10,000 every month on recurring expenses with Planergy.

King Ocean Logo

Cristian Maradiaga

Download a free copy of "preparing your ap department for the future", to learn:.

  • How to transition from paper and excel to eInvoicing.
  • How AP can improve relationships with your key suppliers.
  • How to capture early payment discounts and avoid late payment penalties.
  • How better management in AP can give you better flexibility for cash flow management.

Business Plan Financial Projections: How To Create Accurate Targets

  • Written by Keith Murphy
  • 16 min read

Business Plan Financial Projections

Small businesses and startups have a lot riding on their ability to create effective and accurate financial projections as part of their business plan. Solid financials are a strong enticement for investors, after all, and can help new businesses chart a course that will take them beyond the legendendarily difficult first year and into a productive and profitable future.

But the need for business owners to look ahead in order to secure funding, increase profits, and make intelligent financial decisions doesn’t end when startups become full-fledged businesses—and business plan financial projections aren’t just for startups. Existing businesses can also put them to good use by harvesting insights from their existing financial statements and creating sales projections and other financial forecasts that guide and improve their ongoing business planning.

What Are Business Plan Financial Projections?

Successful companies plan ahead, looking as best they can into the near and distant future to chart a course to growth, innovation, and competitive strength. Financial projections, both as part of an initial business plan and as part of ongoing business planning, use a company’s financial statements to help business owners forecast their upcoming expenses and revenue in a strategically useful way.

Most businesses use two types of financial projections:

  • Short-term projections are broken down by month and generally cover the coming 12 months. They provide a guide companies can use to monitor and adjust their financial activity to set and hit targets for the financial year. In the first year, short-term projections will be entirely estimated, but in subsequent years, historical data can be used to help fine-tune them for greater accuracy and strategic utility.
  • Long-term projections are focused on the coming three to five years and are generally used to secure investment (both initial and ongoing), provide a strategic roadmap for the company’s growth, or both.

For startups, creating financial projections is part of their initial business plan. Providing financial forecasts banks and potential investors can use to determine the financial viability of a business is key to obtaining financing and investments needed to get the business off the ground.

For existing businesses—for whom an initial business plan has evolved into business planning—financial projections are useful in attracting investors who want to see clear estimates for upcoming revenue, expenses, and potential growth. They’re also helpful in securing loans and lines of credit from financial institutions for the same reason. And even if you’re not trying to get funding or investments, financial projections provide a useful framework for building budgets focused on growth and competitive advantage.

So whether you’re a small business owner, an aspiring tycoon starting a new business, or part of the financial team at a well-established corporation, what matters most is viewing financial projections as a living, breathing reference tool that can help you plan and budget for growth in a realistic way while still setting aspirational goals for your business.

Financial projections, both as part of an initial business plan and as part of ongoing business planning, use a company’s financial statements to help business owners forecast their upcoming expenses and revenue in a strategically useful way.

Financial Projections: Core Components

Whether you’re preparing them as part of your business plan or to enhance your business planning, you’ll need the same financial statements to prepare financial projections: an income statement, a cash-flow statement, and a balance sheet.

  • Income statements , sometimes called profit and loss statements , provide detailed information on your company’s revenue and expenses for a given period (e.g., a quarter, year, or multi-year period).
  • Cash flow statements provide a comprehensive view of cash flowing into and out of a business. They record all cash flow from operations, investment, and financing activities.
  • Balance sheets are used to showcase a company’s assets, liabilities, and owner’s equity for a specific period.

How to Create Financial Projections

The process of creating financial projections is the same whether you’re drafting a business plan or creating forecasts for an existing business. The primary difference is whether you’ll draw on your own research and expertise (a new business or startup business) or use historical data (existing businesses).

Keep in mind that while you’ll create the necessary documents separately, you’ll most likely finish them by consulting each of them as needed. For example, your sales forecast might change once you prepare your cash-flow statement. The best approach is to view each document as both its own piece of the financial projection puzzle and a reference for the others; this will help ensure you can assemble comprehensive and clear financial projections.

1. Start with a Sales Projection

A sales forecast is the first step in creating your income statement. You can start with a one, three, or five-year projection, but keep in mind that, without historical financial data, accuracy may decrease over time. It’s best to start with monthly income statements until you reach your projected break-even , which is the point at which revenue exceeds total operating expenses and you show a profit. Once you hit the break-even, you can transition to annual income statements.

Also, keep in mind factors outside of sales; market conditions, global environmental, political, and health concerns, sourcing challenges (including pricing changes and increased variable costs) and other business disruptors can put the kibosh on your carefully constructed forecasts if you leave them out of your considerations.

Start with a reasonable estimate of the units sold for the forecast period, and multiply them by the price per unit. This value is your total sales for the period.

Next, estimate the total cost of producing these units (i.e., the cost of goods sold , or COGS; sometimes called cost of sales ) by multiplying the per-unit cost by the number of units produced.

Deducting your COGS from your estimated sales yields your gross profit margin.

From the gross margin, subtract expenses such as wages, marketing costs, rent, and other operating expenses. The result is your projected operating income , or net income .

Using these figures, you can create an income statement:

2. Cash Flow Statement

Tracking your estimated cash inflows and outflows from investment and financing, combined with the cash generated by business operations, is the purpose of a cash flow projection .

Investment activities might include, for example, purchasing real estate or investing in research and development outside of daily operations.

Financing activities include cash inflows from investor funding or business loans, as well as cash outflows to repay debts or pay dividends to shareholders.

A reliable and accurate cash flow projection is essential to managing your working capital effectively and ensuring you have all the cash you need to cover your ongoing obligations while still having enough left to invest in growth and innovation or cover emergencies.

Drawing from our income statement, we can create a basic cash flow statement:

3. The Balance Sheet

Providing a “snapshot” of your businesses’ financial performance for a given period of time, the balance sheet contains your company’s assets, liabilities, and owner’s equity.

Assets include inventory, real estate, and capital, while liabilities represent financial obligations and include accounts payable, bank loans, and other debt.

Owner’s equity represents the amount remaining once liabilities have been paid.

Ideally, over time your company’s balance sheet will reflect your growth through a reduction of liabilities and an increase in owner’s equity.

We can complete our triumvirate of financial statements with a basic balance sheet:

Best Practices for Effective Financial Projections

Like a lot of other business processes, financial planning can be complex, time-consuming, and even frustrating if you’re still using manual workflows and paper documents or basic spreadsheet-style applications such as Microsoft Excel. You can get free templates for basic financial projections from the Service Corps of Retired Executives (SCORE), but even templates can only take you so far.

Without a doubt, the best advantage you can give yourself in creating effective and accurate financial projections—whether they’re for the financial section of your business plan or simply part of your ongoing business planning—is to invest in comprehensive procure-to-pay (P2P) software such as Planergy.

In addition to helpful templates, best-in-class P2P software also provides a rich array of real-time data analysis, reporting, and forecasting tools that make it easy to transform historical data (or market research) into accurate forecasts. In addition, artificial intelligence and process automation make it easy to collect, organize, manage and share your data with all internal stakeholders, so everyone has the information they need to create the most useful and complete forecasts and projections possible.

Beyond investing in P2P software, you can also improve the quality and accuracy of your financial projections by:

  • Doing your homework. Invest in financial statement analysis and ratio analysis, with a focus not just on your own company, but your industry and the market in general. Learn the current ratios used for liquidity analysis, profitability, and debt and compare them to your own to get a more nuanced and useful understanding of how your company performs internally and within the context of the marketplace.
  • Keeping it real. It can be all too easy to get carried away with pie-in-the-sky optimism when forecasting the future of your business. Rose-colored glasses aren’t exclusive to startups and small businesses; over-inflated estimates can hobble even veteran organizations if they don’t practice good data discipline and temper their hopes with practical considerations. Focus on creating realistic, but positive, projections, and you won’t have to worry about investors or lenders glancing askance at your hard work.
  • Hoping for the best, but planning for the worst. Run two scenarios when performing your financial projections: the best-case scenario where everything goes perfectly to plan, and a worse-case scenario where Murphy’s Law holds sway. While actual performance will undoubtedly fall somewhere in between the two, having an upper and lower boundary appeals to investors and lenders who are assessing your company’s financial viability.

Financial Projections Help You Reach Your Goals for Growth

From startups to global corporations, every business needs reliable tools for financial forecasting. Take the time to create well-researched, data-driven financial projections, and you’ll be well-equipped to attract investors, secure funding, and chart a course for greater profits, growth, and performance in today’s competitive marketplace.

What’s your goal today?

1. use planergy to manage purchasing and accounts payable.

  • Read our case studies, client success stories, and testimonials.
  • Visit our “Solutions” page to see the areas of your business we can help improve to see if we’re a good fit for each other.
  • Learn about us, and our long history of helping companies just like yours.

2. Download our guide “Preparing Your AP Department For The Future”

3. learn best practices for purchasing, finance, and more.

Browse hundreds of articles , containing an amazing number of useful tools, techniques, and best practices. Many readers tell us they would have paid consultants for the advice in these articles.

Related Posts

The Future of FPA

The Future of FP&A: How The Role Is Evolving With The Use Of Real-Time Data

  • 17 min read

Days Sales Outstanding

Days Sales Outstanding: What Is It and How To Calculate It

  • 19 min read

Budgeting In UK Schools MAT

Budgeting In UK Schools: MAT, Academy Budgeting Challenges and Best Practices

Procurement.

  • Purchasing Software
  • Purchase Order Software
  • Procurement Solutions
  • Procure-to-Pay Software
  • E-Procurement Software
  • PO System For Small Business
  • Spend Analysis Software
  • Vendor Management Software
  • Inventory Management Software

AP & FINANCE

  • Accounts Payable Software
  • AP Automation Software
  • Compliance Management Software
  • Business Budgeting Software
  • Workflow Automation Software
  • Integrations
  • Reseller Partner Program

Business is Our Business

Stay up-to-date with news sent straight to your inbox

Sign up with your email to receive updates from our blog

This website uses cookies

We use cookies to personalise content and ads, to provide social media features and to analyse our traffic. We also share information about your use of our site with our social media, advertising and analytics partners who may combine it with other information that you’ve provided to them or that they’ve collected from your use of their services.

Read our privacy statement here .

Free Financial Templates for a Business Plan

By Andy Marker | July 29, 2020

  • Share on Facebook
  • Share on LinkedIn

Link copied

In this article, we’ve rounded up expert-tested financial templates for your business plan, all of which are free to download in Excel, Google Sheets, and PDF formats.

Included on this page, you’ll find the essential financial statement templates, including income statement templates , cash flow statement templates , and balance sheet templates . Plus, we cover the key elements of the financial section of a business plan .

Financial Plan Templates

Download and prepare these financial plan templates to include in your business plan. Use historical data and future projections to produce an overview of the financial health of your organization to support your business plan and gain buy-in from stakeholders

Business Financial Plan Template

Business Financial Plan Template

Use this financial plan template to organize and prepare the financial section of your business plan. This customizable template has room to provide a financial overview, any important assumptions, key financial indicators and ratios, a break-even analysis, and pro forma financial statements to share key financial data with potential investors.

Download Financial Plan Template

Word | PDF | Smartsheet

Financial Plan Projections Template for Startups

Startup Financial Projections Template

This financial plan projections template comes as a set of pro forma templates designed to help startups. The template set includes a 12-month profit and loss statement, a balance sheet, and a cash flow statement for you to detail the current and projected financial position of a business.

‌ Download Startup Financial Projections Template

Excel | Smartsheet

Income Statement Templates for Business Plan

Also called profit and loss statements , these income statement templates will empower you to make critical business decisions by providing insight into your company, as well as illustrating the projected profitability associated with business activities. The numbers prepared in your income statement directly influence the cash flow and balance sheet forecasts.

Pro Forma Income Statement/Profit and Loss Sample

financial outlook in business plan

Use this pro forma income statement template to project income and expenses over a three-year time period. Pro forma income statements consider historical or market analysis data to calculate the estimated sales, cost of sales, profits, and more.

‌ Download Pro Forma Income Statement Sample - Excel

Small Business Profit and Loss Statement

Small Business Profit and Loss Template

Small businesses can use this simple profit and loss statement template to project income and expenses for a specific time period. Enter expected income, cost of goods sold, and business expenses, and the built-in formulas will automatically calculate the net income.

‌ Download Small Business Profit and Loss Template - Excel

3-Year Income Statement Template

3 Year Income Statement Template

Use this income statement template to calculate and assess the profit and loss generated by your business over three years. This template provides room to enter revenue and expenses associated with operating your business and allows you to track performance over time.

Download 3-Year Income Statement Template

For additional resources, including how to use profit and loss statements, visit “ Download Free Profit and Loss Templates .”

Cash Flow Statement Templates for Business Plan

Use these free cash flow statement templates to convey how efficiently your company manages the inflow and outflow of money. Use a cash flow statement to analyze the availability of liquid assets and your company’s ability to grow and sustain itself long term.

Simple Cash Flow Template

financial outlook in business plan

Use this basic cash flow template to compare your business cash flows against different time periods. Enter the beginning balance of cash on hand, and then detail itemized cash receipts, payments, costs of goods sold, and expenses. Once you enter those values, the built-in formulas will calculate total cash payments, net cash change, and the month ending cash position.

Download Simple Cash Flow Template

12-Month Cash Flow Forecast Template

financial outlook in business plan

Use this cash flow forecast template, also called a pro forma cash flow template, to track and compare expected and actual cash flow outcomes on a monthly and yearly basis. Enter the cash on hand at the beginning of each month, and then add the cash receipts (from customers, issuance of stock, and other operations). Finally, add the cash paid out (purchases made, wage expenses, and other cash outflow). Once you enter those values, the built-in formulas will calculate your cash position for each month with.

‌ Download 12-Month Cash Flow Forecast

3-Year Cash Flow Statement Template Set

3 Year Cash Flow Statement Template

Use this cash flow statement template set to analyze the amount of cash your company has compared to its expenses and liabilities. This template set contains a tab to create a monthly cash flow statement, a yearly cash flow statement, and a three-year cash flow statement to track cash flow for the operating, investing, and financing activities of your business.

Download 3-Year Cash Flow Statement Template

For additional information on managing your cash flow, including how to create a cash flow forecast, visit “ Free Cash Flow Statement Templates .”

Balance Sheet Templates for a Business Plan

Use these free balance sheet templates to convey the financial position of your business during a specific time period to potential investors and stakeholders.

Small Business Pro Forma Balance Sheet

financial outlook in business plan

Small businesses can use this pro forma balance sheet template to project account balances for assets, liabilities, and equity for a designated period. Established businesses can use this template (and its built-in formulas) to calculate key financial ratios, including working capital.

Download Pro Forma Balance Sheet Template

Monthly and Quarterly Balance Sheet Template

financial outlook in business plan

Use this balance sheet template to evaluate your company’s financial health on a monthly, quarterly, and annual basis. You can also use this template to project your financial position for a specified time in the future. Once you complete the balance sheet, you can compare and analyze your assets, liabilities, and equity on a quarter-over-quarter or year-over-year basis.

Download Monthly/Quarterly Balance Sheet Template - Excel

Yearly Balance Sheet Template

financial outlook in business plan

Use this balance sheet template to compare your company’s short and long-term assets, liabilities, and equity year-over-year. This template also provides calculations for common financial ratios with built-in formulas, so you can use it to evaluate account balances annually.

Download Yearly Balance Sheet Template - Excel

For more downloadable resources for a wide range of organizations, visit “ Free Balance Sheet Templates .”

Sales Forecast Templates for Business Plan

Sales projections are a fundamental part of a business plan, and should support all other components of your plan, including your market analysis, product offerings, and marketing plan . Use these sales forecast templates to estimate future sales, and ensure the numbers align with the sales numbers provided in your income statement.

Basic Sales Forecast Sample Template

Basic Sales Forecast Template

Use this basic forecast template to project the sales of a specific product. Gather historical and industry sales data to generate monthly and yearly estimates of the number of units sold and the price per unit. Then, the pre-built formulas will calculate percentages automatically. You’ll also find details about which months provide the highest sales percentage, and the percentage change in sales month-over-month. 

Download Basic Sales Forecast Sample Template

12-Month Sales Forecast Template for Multiple Products

financial outlook in business plan

Use this sales forecast template to project the future sales of a business across multiple products or services over the course of a year. Enter your estimated monthly sales, and the built-in formulas will calculate annual totals. There is also space to record and track year-over-year sales, so you can pinpoint sales trends.

Download 12-Month Sales Forecasting Template for Multiple Products

3-Year Sales Forecast Template for Multiple Products

3 Year Sales Forecast Template

Use this sales forecast template to estimate the monthly and yearly sales for multiple products over a three-year period. Enter the monthly units sold, unit costs, and unit price. Once you enter those values, built-in formulas will automatically calculate revenue, margin per unit, and gross profit. This template also provides bar charts and line graphs to visually display sales and gross profit year over year.

Download 3-Year Sales Forecast Template - Excel

For a wider selection of resources to project your sales, visit “ Free Sales Forecasting Templates .”

Break-Even Analysis Template for Business Plan

A break-even analysis will help you ascertain the point at which a business, product, or service will become profitable. This analysis uses a calculation to pinpoint the number of service or unit sales you need to make to cover costs and make a profit.

Break-Even Analysis Template

Break Even Analysis

Use this break-even analysis template to calculate the number of sales needed to become profitable. Enter the product's selling price at the top of the template, and then add the fixed and variable costs. Once you enter those values, the built-in formulas will calculate the total variable cost, the contribution margin, and break-even units and sales values.

Download Break-Even Analysis Template

For additional resources, visit, “ Free Financial Planning Templates .”

Business Budget Templates for Business Plan

These business budget templates will help you track costs (e.g., fixed and variable) and expenses (e.g., one-time and recurring) associated with starting and running a business. Having a detailed budget enables you to make sound strategic decisions, and should align with the expense values listed on your income statement.

Startup Budget Template

financial outlook in business plan

Use this startup budget template to track estimated and actual costs and expenses for various business categories, including administrative, marketing, labor, and other office costs. There is also room to provide funding estimates from investors, banks, and other sources to get a detailed view of the resources you need to start and operate your business.

Download Startup Budget Template

Small Business Budget Template

financial outlook in business plan

This business budget template is ideal for small businesses that want to record estimated revenue and expenditures on a monthly and yearly basis. This customizable template comes with a tab to list income, expenses, and a cash flow recording to track cash transactions and balances.

Download Small Business Budget Template

Professional Business Budget Template

financial outlook in business plan

Established organizations will appreciate this customizable business budget template, which  contains a separate tab to track projected business expenses, actual business expenses, variances, and an expense analysis. Once you enter projected and actual expenses, the built-in formulas will automatically calculate expense variances and populate the included visual charts. 

‌ Download Professional Business Budget Template

For additional resources to plan and track your business costs and expenses, visit “ Free Business Budget Templates for Any Company .”

Other Financial Templates for Business Plan

In this section, you’ll find additional financial templates that you may want to include as part of your larger business plan.

Startup Funding Requirements Template

Startup Funding Requirements Template

This simple startup funding requirements template is useful for startups and small businesses that require funding to get business off the ground. The numbers generated in this template should align with those in your financial projections, and should detail the allocation of acquired capital to various startup expenses.

Download Startup Funding Requirements Template - Excel

Personnel Plan Template

Personnel Plan Template

Use this customizable personnel plan template to map out the current and future staff needed to get — and keep — the business running. This information belongs in the personnel section of a business plan, and details the job title, amount of pay, and hiring timeline for each position. This template calculates the monthly and yearly expenses associated with each role using built-in formulas. Additionally, you can add an organizational chart to provide a visual overview of the company’s structure. 

Download Personnel Plan Template - Excel

Elements of the Financial Section of a Business Plan

Whether your organization is a startup, a small business, or an enterprise, the financial plan is the cornerstone of any business plan. The financial section should demonstrate the feasibility and profitability of your idea and should support all other aspects of the business plan. 

Below, you’ll find a quick overview of the components of a solid financial plan.

  • Financial Overview: This section provides a brief summary of the financial section, and includes key takeaways of the financial statements. If you prefer, you can also add a brief description of each statement in the respective statement’s section.
  • Key Assumptions: This component details the basis for your financial projections, including tax and interest rates, economic climate, and other critical, underlying factors.
  • Break-Even Analysis: This calculation helps establish the selling price of a product or service, and determines when a product or service should become profitable.
  • Pro Forma Income Statement: Also known as a profit and loss statement, this section details the sales, cost of sales, profitability, and other vital financial information to stakeholders.
  • Pro Forma Cash Flow Statement: This area outlines the projected cash inflows and outflows the business expects to generate from operating, financing, and investing activities during a specific timeframe.
  • Pro Forma Balance Sheet: This document conveys how your business plans to manage assets, including receivables and inventory.
  • Key Financial Indicators and Ratios: In this section, highlight key financial indicators and ratios extracted from financial statements that bankers, analysts, and investors can use to evaluate the financial health and position of your business.

Need help putting together the rest of your business plan? Check out our free simple business plan templates to get started. You can learn how to write a successful simple business plan  here . 

Visit this  free non-profit business plan template roundup  or download a  fill-in-the-blank business plan template  to make things easy. If you are looking for a business plan template by file type, visit our pages dedicated specifically to  Microsoft Excel ,  Microsoft Word , and  Adobe PDF  business plan templates. Read our articles offering  startup business plan templates  or  free 30-60-90-day business plan templates  to find more tailored options.

Discover a Better Way to Manage Business Plan Financials and Finance Operations

Empower your people to go above and beyond with a flexible platform designed to match the needs of your team — and adapt as those needs change. 

The Smartsheet platform makes it easy to plan, capture, manage, and report on work from anywhere, helping your team be more effective and get more done. Report on key metrics and get real-time visibility into work as it happens with roll-up reports, dashboards, and automated workflows built to keep your team connected and informed. 

When teams have clarity into the work getting done, there’s no telling how much more they can accomplish in the same amount of time.  Try Smartsheet for free, today.

Discover why over 90% of Fortune 100 companies trust Smartsheet to get work done.

  • Business Essentials
  • Leadership & Management
  • Credential of Leadership, Impact, and Management in Business (CLIMB)
  • Entrepreneurship & Innovation
  • Digital Transformation
  • Finance & Accounting
  • Business in Society
  • For Organizations
  • Support Portal
  • Media Coverage
  • Founding Donors
  • Leadership Team

financial outlook in business plan

  • Harvard Business School →
  • HBS Online →
  • Business Insights →

Business Insights

Harvard Business School Online's Business Insights Blog provides the career insights you need to achieve your goals and gain confidence in your business skills.

  • Career Development
  • Communication
  • Decision-Making
  • Earning Your MBA
  • Negotiation
  • News & Events
  • Productivity
  • Staff Spotlight
  • Student Profiles
  • Work-Life Balance
  • AI Essentials for Business
  • Alternative Investments
  • Business Analytics
  • Business Strategy
  • Business and Climate Change
  • Design Thinking and Innovation
  • Digital Marketing Strategy
  • Disruptive Strategy
  • Economics for Managers
  • Entrepreneurship Essentials
  • Financial Accounting
  • Global Business
  • Launching Tech Ventures
  • Leadership Principles
  • Leadership, Ethics, and Corporate Accountability
  • Leading Change and Organizational Renewal
  • Leading with Finance
  • Management Essentials
  • Negotiation Mastery
  • Organizational Leadership
  • Power and Influence for Positive Impact
  • Strategy Execution
  • Sustainable Business Strategy
  • Sustainable Investing
  • Winning with Digital Platforms

7 Financial Forecasting Methods to Predict Business Performance

Professional on laptop using financial forecasting methods to predict business performance

  • 21 Jun 2022

Much of accounting involves evaluating past performance. Financial results demonstrate business success to both shareholders and the public. Planning and preparing for the future, however, is just as important.

Shareholders must be reassured that a business has been, and will continue to be, successful. This requires financial forecasting.

Here's an overview of how to use pro forma statements to conduct financial forecasting, along with seven methods you can leverage to predict a business's future performance.

What Is Financial Forecasting?

Financial forecasting is predicting a company’s financial future by examining historical performance data, such as revenue, cash flow, expenses, or sales. This involves guesswork and assumptions, as many unforeseen factors can influence business performance.

Financial forecasting is important because it informs business decision-making regarding hiring, budgeting, predicting revenue, and strategic planning . It also helps you maintain a forward-focused mindset.

Each financial forecast plays a major role in determining how much attention is given to individual expense items. For example, if you forecast high-level trends for general planning purposes, you can rely more on broad assumptions than specific details. However, if your forecast is concerned with a business’s future, such as a pending merger or acquisition, it's important to be thorough and detailed.

Access your free e-book today.

Forecasting with Pro Forma Statements

A common type of forecasting in financial accounting involves using pro forma statements . Pro forma statements focus on a business's future reports, which are highly dependent on assumptions made during preparation⁠, such as expected market conditions.

Because the term "pro forma" refers to projections or forecasts, pro forma statements apply to any financial document, including:

  • Income statements
  • Balance sheets
  • Cash flow statements

These statements serve both internal and external purposes. Internally, you can use them for strategic planning. Identifying future revenues and expenses can greatly impact business decisions related to hiring and budgeting. Pro forma statements can also inform endeavors by creating multiple statements and interchanging variables to conduct side-by-side comparisons of potential outcomes.

Externally, pro forma statements can demonstrate the risk of investing in a business. While this is an effective form of forecasting, investors should know that pro forma statements don't typically comply with generally accepted accounting principles (GAAP) . This is because pro forma statements don't include one-time expenses—such as equipment purchases or company relocations—which allows for greater accuracy because those expenses don't reflect a company’s ongoing operations.

7 Financial Forecasting Methods

Pro forma statements are incredibly valuable when forecasting revenue, expenses, and sales. These findings are often further supported by one of seven financial forecasting methods that determine future income and growth rates.

There are two primary categories of forecasting: quantitative and qualitative.

Quantitative Methods

When producing accurate forecasts, business leaders typically turn to quantitative forecasts , or assumptions about the future based on historical data.

1. Percent of Sales

Internal pro forma statements are often created using percent of sales forecasting . This method calculates future metrics of financial line items as a percentage of sales. For example, the cost of goods sold is likely to increase proportionally with sales; therefore, it’s logical to apply the same growth rate estimate to each.

To forecast the percent of sales, examine the percentage of each account’s historical profits related to sales. To calculate this, divide each account by its sales, assuming the numbers will remain steady. For example, if the cost of goods sold has historically been 30 percent of sales, assume that trend will continue.

2. Straight Line

The straight-line method assumes a company's historical growth rate will remain constant. Forecasting future revenue involves multiplying a company’s previous year's revenue by its growth rate. For example, if the previous year's growth rate was 12 percent, straight-line forecasting assumes it'll continue to grow by 12 percent next year.

Although straight-line forecasting is an excellent starting point, it doesn't account for market fluctuations or supply chain issues.

3. Moving Average

Moving average involves taking the average—or weighted average—of previous periods⁠ to forecast the future. This method involves more closely examining a business’s high or low demands, so it’s often beneficial for short-term forecasting. For example, you can use it to forecast next month’s sales by averaging the previous quarter.

Moving average forecasting can help estimate several metrics. While it’s most commonly applied to future stock prices, it’s also used to estimate future revenue.

To calculate a moving average, use the following formula:

A1 + A2 + A3 … / N

Formula breakdown:

A = Average for a period

N = Total number of periods

Using weighted averages to emphasize recent periods can increase the accuracy of moving average forecasts.

4. Simple Linear Regression

Simple linear regression forecasts metrics based on a relationship between two variables⁠: dependent and independent. The dependent variable represents the forecasted amount, while the independent variable is the factor that influences the dependent variable.

The equation for simple linear regression is:

Y ⁠ = Dependent variable⁠ (the forecasted number)

B = Regression line's slope

X = Independent variable

A = Y-intercept

5. Multiple Linear Regression

If two or more variables directly impact a company's performance, business leaders might turn to multiple linear regression . This allows for a more accurate forecast, as it accounts for several variables that ultimately influence performance.

To forecast using multiple linear regression, a linear relationship must exist between the dependent and independent variables. Additionally, the independent variables can’t be so closely correlated that it’s impossible to tell which impacts the dependent variable.

Financial Accounting| Understand the numbers that drive business success | Learn More

Qualitative Methods

When it comes to forecasting, numbers don't always tell the whole story. There are additional factors that influence performance and can't be quantified. Qualitative forecasting relies on experts’ knowledge and experience to predict performance rather than historical numerical data.

These forecasting methods are often called into question, as they're more subjective than quantitative methods. Yet, they can provide valuable insight into forecasts and account for factors that can’t be predicted using historical data.

6. Delphi Method

The Delphi method of forecasting involves consulting experts who analyze market conditions to predict a company's performance.

A facilitator reaches out to those experts with questionnaires, requesting forecasts of business performance based on their experience and knowledge. The facilitator then compiles their analyses and sends them to other experts for comments. The goal is to continue circulating them until a consensus is reached.

7. Market Research

Market research is essential for organizational planning. It helps business leaders obtain a holistic market view based on competition, fluctuating conditions, and consumer patterns. It’s also critical for startups when historical data isn’t available. New businesses can benefit from financial forecasting because it’s essential for recruiting investors and budgeting during the first few months of operation.

When conducting market research, begin with a hypothesis and determine what methods are needed. Sending out consumer surveys is an excellent way to better understand consumer behavior when you don’t have numerical data to inform decisions.

A Manager's Guide to Finance and Accounting | Access Your Free E-Book | Download Now

Improve Your Forecasting Skills

Financial forecasting is never a guarantee, but it’s critical for decision-making. Regardless of your business’s industry or stage, it’s important to maintain a forward-thinking mindset—learning from past patterns is an excellent way to plan for the future.

If you’re interested in further exploring financial forecasting and its role in business, consider taking an online course, such as Financial Accounting , to discover how to use it alongside other financial tools to shape your business.

Do you want to take your financial accounting skills to the next level? Consider enrolling in Financial Accounting —one of three courses comprising our Credential of Readiness (CORe) program —to learn how to use financial principles to inform business decisions. Not sure which course is right for you? Download our free flowchart .

financial outlook in business plan

About the Author

financial outlook in business plan

7-step guide to financial forecasting & planning for any business

What is financial forecasting, why is it important, and how to properly conduct financial planning and forecasting

  • What is financial forecasting?
  • Why is it important?
  • 4 common types of financial forecasting
  • How to do financial forecasting in 7 steps
  • Financial forecasting FAQs

Join our newsletter for the latest in SaaS

By subscribing you agree to receive the Paddle newsletter. Unsubscribe at any time.

Uncertainty is one of the constant aspects of doing business. Many factors beyond your control can potentially influence the market in ways you didn't expect. For example, new technologies are constantly changing operations across almost all industries at a fundamental level. 

It pays to know what to expect in the near future and plan ahead, hence the need for financial forecasting. Every business (including monopolies) could benefit incredibly from regular  financial forecasting . Here is a comprehensive guide on the importance of financial forecasting for your business model and how to do it.

Failure to conduct regular financial forecasting leaves you flying blind.

What is financial forecasting? 

Financial forecasting refers to financial projections performed to facilitate any decision-making relevant for determining future business performance. The financial forecasting process includes the analysis of past business performance, current  business trends , and other relevant factors.

However, some aspects of financial forecasting may change depending on the type and purpose of the forecast, as will be discussed later. 

Importance of financial forecasting 

Hypothetically speaking, failure to conduct regular financial forecasting leaves you flying blind. Regular forecasting has extensive benefits for some of your business' fundamental operations, including: 

Annual budget planning 

A budget represents your business' cash flow, financial positions, and future goals and expectations for a set fiscal period.  Financial forecasting and planning  work in tandem, as forecasting essentially offers an insight into your business' future—these insights help make budgeting accurate.  

Establishing realistic business goals 

Accurate forecasting will help predict whether (and by how much) your business will grow or decline. As such, you can set realistic and achievable goals—and manage your expectations. 

Identifying problem areas 

Financial forecasting  can help you identify ongoing problems by analyzing the business' past performance. Additionally, you can identify potential problems by getting an insight into what the future holds. 

Reduction of financial risk 

You risk overspending by creating a budget without financial forecasting. In fact, most of your financial decisions would be ill-informed without the input of a financial forecast's results. 

Greater company appeal to attract investors 

Investors use a company's financial forecast to predict its future performance—and the potential ROIs on their investments. Additionally, regular forecasting shows your investors that you are in control and have a solid business plan prepared for the future.

4 common types of financial forecasting 

Businesses conduct financial forecasting for varying purposes. Consequently, forecasting practices are categorized into four types: 

1. Sales forecasting 

Sales forecasting entails predicting the amounts of products/services you expect to sell within a projected fiscal period. There are two sales forecasting methodologies: top-down forecasting and bottom-up forecasting. 

Sales forecasting has many uses and benefits, including budgeting and planning production cycles. It also helps companies manage and allocate resources more efficiently. 

2. Cash flow forecasting 

Cash flow forecasting  entails estimating the flow of cash in and out of the company over a set fiscal period. It's based on factors such as income and expenses. It has many uses and benefits, including identifying immediate funding needs and budgeting. However, it is worth noting that cash flow financial forecasting is more accurate over a short term. 

3. Budget forecasting 

As a financial guide for your business' future, a budget creates certain expectations about your company's performance. Budget forecasting aims to determine the ideal outcome of the budget, assuming that everything proceeds as planned. It relies on the budget's data, which relies on financial forecasting data. 

4. Income forecasting 

Income forecasting entails analyzing the company's past revenue performance and current growth rate to estimate future income. It is integral to doing  cash flow  and balance sheet forecasting. Additionally, the company's investors, suppliers, and other concerned third parties use this data to make crucial decisions. For example, suppliers use it when determining how much to credit the company in supplies. 

How to do financial forecasting in 7 steps 

Many integral aspects of your company's current and future operations hinge on the results of your financial forecasts. For example, forecasting results will influence investors' decisions, determine how much your company can get in credit, and more. 

As such, accuracy cannot be overemphasized. Here is a step-by-step guide to ensure that you do it right: 

1. Define the purpose of a financial forecast 

What do you hope to learn from the financial forecast? Do you hope to estimate how many units of your products or services you will sell? Or perhaps you wish to see how the company's current budget will shape its future? Defining your financial forecast's purpose is essential to determining which metrics and factors to consider when doing it. 

2. Gather past financial statements and historical data 

One of the components of financial forecasting involves analyzing past financial data, as explained. As such, it is important to gather all relevant historical  data and records , including: 

  • Liabilities 
  • Investments 
  • Expenditures 
  • Comprehensive income 
  • Earnings per share 
  • Fixed costs

It's important to ensure that you gather all required information as your financial forecast's results will be inaccurate if you exclude relevant data.

3. Choose a time frame for your forecast 

Financial forecasts are designed to give business owners an insight into the company's future. You get to decide how far into the future to look, and it can range from several weeks to several years. However, most companies do forecasts for one fiscal year. 

Financial forecasts change over time as factors such as business and market trends change. Consequently, it is worth noting that financial forecasting is more accurate in the short term than in the long term.

4. Choose a financial forecast method 

There are two financial forecasting methods: 

  • Quantitative forecasting uses historical information and data to identify trends, reliable patterns, and trends. 
  • Qualitative forecasting analyzes experts' opinions and sentiments about the company and market as a whole. 

Each method is suitable for different uses and has its strengths and shortcomings. However, qualitative forecasting is more suitable for startups without past data to which they can refer. 

5. Document and monitor results 

Financial forecasts are never 100% accurate and tend to change over time. As such, it is important to document and monitor your forecast's results over time, especially after major internal and external developments. It is also important to update your forecasts to reflect the latest developments. Using  forecasting software  to automate related tasks may help too.

6. Analyze financial data 

Regularly analyzing financial data is the best way to tell whether your financial forecasts are accurate. Additionally, continuous financial management and analysis helps you prepare better for the next financial forecast and gives you crucial insights into the company's current financial performance. 

7. Repeat based on the previously defined time frame 

Smart companies conduct regular financial forecasting to stay in the know and in control. As such, it is advisable to repeat the process once the time period set for the current financial forecast elapses. It's also prudent to keep collecting, recording, and analyzing data to improve your financial forecasts' accuracy.

Get accurate metrics for financial forecasting—absolutely free 

An efficient system of collecting, storing, and analyzing data is necessary for accurate financial forecasting. ProfitWell Metrics is a subscription analytics software designed to do all of this on one platform. Some of the metrics that you can get using this program include: 

  • Monthly and annual recurring revenues 
  • Market and customer segments 
  • Customer acquisition and retention 
  • Customer lifetime value 
  • Churn rate 
  • The average revenue per user 

ProfitWell Metrics collects and records all  important metrics , giving you enough data to work with when conducting a financial forecast. Additionally, the data collected in real-time offers crucial insights to help you update your forecasts and other projects accordingly. 

ProfitWell Metrics also integrates seamlessly with other popular data analytics programs, including Google Sheets and Stripe. More importantly, it's 100% free and secure. 

financial outlook in business plan

Take the headache out of growing your software business

We handle your payments, tax, subscription management and more, so you can focus on growing your software and subscription business.

Financial forecasting FAQs 

Some of the most frequently asked questions regarding financial forecasting include: 

What is the role of forecasting in financial planning? 

Financial forecasting estimates important financial metrics such as sales, income, and future revenue. These metrics are crucial for finance-related operations such as budgeting and financial planning as a whole. Consequently, forecasting functions as a guiding tool (or marking scheme) for financial planning. 

What is the difference between financial forecasting and modeling? 

On the one hand, financial forecasting entails predicting the business' future performance. On the other hand, financial modeling entails simulating how financial forecasts and other data may affect the company's future if everything goes according to plan. Financial modeling is done for very specific and often discrete purposes. 

What is the difference between financial forecasting and budgeting? 

Financial forecasting and budgeting work in tandem and are often misinterpreted as meaning the same thing. However, financial forecasting entails estimating and predicting the company's future performance (financially and in other aspects). On the other hand, budgeting is the company's financial expectations for the future (expectations based on financial forecasts and other data). 

What are the three pro forma statements needed for financial forecasting? 

Pro forma statements are financial reports designed to give insights into how different scenarios would play out based on hypothetical circumstances. There are three pro forma statements: 

  • Pro forma statements of income 
  • Pro forma cash flow statements 
  • Pro forma balance sheets 

Pro forma statements may be hypothetical, but they help companies prepare for an uncertain future. Consequently, they're useful when conducting financial forecasts. 

Related reading

financial outlook in business plan

  • Credit cards
  • View all credit cards
  • Banking guide
  • Loans guide
  • Insurance guide
  • Personal finance
  • View all personal finance
  • Small business
  • Small business guide
  • View all taxes

You’re our first priority. Every time.

We believe everyone should be able to make financial decisions with confidence. And while our site doesn’t feature every company or financial product available on the market, we’re proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward — and free.

So how do we make money? Our partners compensate us. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services. Here is a list of our partners .

How to Write a Market Analysis for a Business Plan

Dan Marticio

Many or all of the products featured here are from our partners who compensate us. This influences which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money .

A lot of preparation goes into starting a business before you can open your doors to the public or launch your online store. One of your first steps should be to write a business plan . A business plan will serve as your roadmap when building your business.

Within your business plan, there’s an important section you should pay careful attention to: your market analysis. Your market analysis helps you understand your target market and how you can thrive within it.

Simply put, your market analysis shows that you’ve done your research. It also contributes to your marketing strategy by defining your target customer and researching their buying habits. Overall, a market analysis will yield invaluable data if you have limited knowledge about your market, the market has fierce competition, and if you require a business loan. In this guide, we'll explore how to conduct your own market analysis.

How to conduct a market analysis: A step-by-step guide

In your market analysis, you can expect to cover the following:

Industry outlook

Target market

Market value

Competition

Barriers to entry

Let’s dive into an in-depth look into each section:

Step 1: Define your objective

Before you begin your market analysis, it’s important to define your objective for writing a market analysis. Are you writing it for internal purposes or for external purposes?

If you were doing a market analysis for internal purposes, you might be brainstorming new products to launch or adjusting your marketing tactics. An example of an external purpose might be that you need a market analysis to get approved for a business loan .

The comprehensiveness of your market analysis will depend on your objective. If you’re preparing for a new product launch, you might focus more heavily on researching the competition. A market analysis for a loan approval would require heavy data and research into market size and growth, share potential, and pricing.

Step 2: Provide an industry outlook

An industry outlook is a general direction of where your industry is heading. Lenders want to know whether you’re targeting a growing industry or declining industry. For example, if you’re looking to sell VCRs in 2020, it’s unlikely that your business will succeed.

Starting your market analysis with an industry outlook offers a preliminary view of the market and what to expect in your market analysis. When writing this section, you'll want to include:

Market size

Are you chasing big markets or are you targeting very niche markets? If you’re targeting a niche market, are there enough customers to support your business and buy your product?

Product life cycle

If you develop a product, what will its life cycle look like? Lenders want an overview of how your product will come into fruition after it’s developed and launched. In this section, you can discuss your product’s:

Research and development

Projected growth

How do you see your company performing over time? Calculating your year-over-year growth will help you and lenders see how your business has grown thus far. Calculating your projected growth shows how your business will fare in future projected market conditions.

Step 3: Determine your target market

This section of your market analysis is dedicated to your potential customer. Who is your ideal target customer? How can you cater your product to serve them specifically?

Don’t make the mistake of wanting to sell your product to everybody. Your target customer should be specific. For example, if you’re selling mittens, you wouldn’t want to market to warmer climates like Hawaii. You should target customers who live in colder regions. The more nuanced your target market is, the more information you’ll have to inform your business and marketing strategy.

With that in mind, your target market section should include the following points:

Demographics

This is where you leave nothing to mystery about your ideal customer. You want to know every aspect of your customer so you can best serve them. Dedicate time to researching the following demographics:

Income level

Create a customer persona

Creating a customer persona can help you better understand your customer. It can be easier to market to a person than data on paper. You can give this persona a name, background, and job. Mold this persona into your target customer.

What are your customer’s pain points? How do these pain points influence how they buy products? What matters most to them? Why do they choose one brand over another?

Research and supporting material

Information without data are just claims. To add credibility to your market analysis, you need to include data. Some methods for collecting data include:

Target group surveys

Focus groups

Reading reviews

Feedback surveys

You can also consult resources online. For example, the U.S. Census Bureau can help you find demographics in calculating your market share. The U.S. Department of Commerce and the U.S. Small Business Administration also offer general data that can help you research your target industry.

Step 4: Calculate market value

You can use either top-down analysis or bottom-up analysis to calculate an estimate of your market value.

A top-down analysis tends to be the easier option of the two. It requires for you to calculate the entire market and then estimate how much of a share you expect your business to get. For example, let’s assume your target market consists of 100,000 people. If you’re optimistic and manage to get 1% of that market, you can expect to make 1,000 sales.

A bottom-up analysis is more data-driven and requires more research. You calculate the individual factors of your business and then estimate how high you can scale them to arrive at a projected market share. Some factors to consider when doing a bottom-up analysis include:

Where products are sold

Who your competition is

The price per unit

How many consumers you expect to reach

The average amount a customer would buy over time

While a bottom-up analysis requires more data than a top-down analysis, you can usually arrive at a more accurate calculation.

Step 5: Get to know your competition

Before you start a business, you need to research the level of competition within your market. Are there certain companies getting the lion’s share of the market? How can you position yourself to stand out from the competition?

There are two types of competitors that you should be aware of: direct competitors and indirect competitors.

Direct competitors are other businesses who sell the same product as you. If you and the company across town both sell apples, you are direct competitors.

An indirect competitor sells a different but similar product to yours. If that company across town sells oranges instead, they are an indirect competitor. Apples and oranges are different but they still target a similar market: people who eat fruits.

Also, here are some questions you want to answer when writing this section of your market analysis:

What are your competitor’s strengths?

What are your competitor’s weaknesses?

How can you cover your competitor’s weaknesses in your own business?

How can you solve the same problems better or differently than your competitors?

How can you leverage technology to better serve your customers?

How big of a threat are your competitors if you open your business?

Step 6: Identify your barriers

Writing a market analysis can help you identify some glaring barriers to starting your business. Researching these barriers will help you avoid any costly legal or business mistakes down the line. Some entry barriers to address in your marketing analysis include:

Technology: How rapid is technology advancing and can it render your product obsolete within the next five years?

Branding: You need to establish your brand identity to stand out in a saturated market.

Cost of entry: Startup costs, like renting a space and hiring employees, are expensive. Also, specialty equipment often comes with hefty price tags. (Consider researching equipment financing to help finance these purchases.)

Location: You need to secure a prime location if you’re opening a physical store.

Competition: A market with fierce competition can be a steep uphill battle (like attempting to go toe-to-toe with Apple or Amazon).

Step 7: Know the regulations

When starting a business, it’s your responsibility to research governmental and state business regulations within your market. Some regulations to keep in mind include (but aren’t limited to):

Employment and labor laws

Advertising

Environmental regulations

If you’re a newer entrepreneur and this is your first business, this part can be daunting so you might want to consult with a business attorney. A legal professional will help you identify the legal requirements specific to your business. You can also check online legal help sites like LegalZoom or Rocket Lawyer.

Tips when writing your market analysis

We wouldn’t be surprised if you feel overwhelmed by the sheer volume of information needed in a market analysis. Keep in mind, though, this research is key to launching a successful business. You don’t want to cut corners, but here are a few tips to help you out when writing your market analysis:

Use visual aids

Nobody likes 30 pages of nothing but text. Using visual aids can break up those text blocks, making your market analysis more visually appealing. When discussing statistics and metrics, charts and graphs will help you better communicate your data.

Include a summary

If you’ve ever read an article from an academic journal, you’ll notice that writers include an abstract that offers the reader a preview.

Use this same tactic when writing your market analysis. It will prime the reader of your market highlights before they dive into the hard data.

Get to the point

It’s better to keep your market analysis concise than to stuff it with fluff and repetition. You’ll want to present your data, analyze it, and then tie it back into how your business can thrive within your target market.

Revisit your market analysis regularly

Markets are always changing and it's important that your business changes with your target market. Revisiting your market analysis ensures that your business operations align with changing market conditions. The best businesses are the ones that can adapt.

Why should you write a market analysis?

Your market analysis helps you look at factors within your market to determine if it’s a good fit for your business model. A market analysis will help you:

1. Learn how to analyze the market need

Markets are always shifting and it’s a good idea to identify current and projected market conditions. These trends will help you understand the size of your market and whether there are paying customers waiting for you. Doing a market analysis helps you confirm that your target market is a lucrative market.

2. Learn about your customers

The best way to serve your customer is to understand them. A market analysis will examine your customer’s buying habits, pain points, and desires. This information will aid you in developing a business that addresses those points.

3. Get approved for a business loan

Starting a business, especially if it’s your first one, requires startup funding. A good first step is to apply for a business loan with your bank or other financial institution.

A thorough market analysis shows that you’re professional, prepared, and worth the investment from lenders. This preparation inspires confidence within the lender that you can build a business and repay the loan.

4. Beat the competition

Your research will offer valuable insight and certain advantages that the competition might not have. For example, thoroughly understanding your customer’s pain points and desires will help you develop a superior product or service than your competitors. If your business is already up and running, an updated market analysis can upgrade your marketing strategy or help you launch a new product.

Final thoughts

There is a saying that the first step to cutting down a tree is to sharpen an axe. In other words, preparation is the key to success. In business, preparation increases the chances that your business will succeed, even in a competitive market.

The market analysis section of your business plan separates the entrepreneurs who have done their homework from those who haven’t. Now that you’ve learned how to write a market analysis, it’s time for you to sharpen your axe and grow a successful business. And keep in mind, if you need help crafting your business plan, you can always turn to business plan software or a free template to help you stay organized.

This article originally appeared on JustBusiness, a subsidiary of NerdWallet.

On a similar note...

One blue credit card on a flat surface with coins on both sides.

Growthink logo white

Financial Assumptions and Your Business Plan

Written by Dave Lavinsky

Certificate with dollar bills and coins

Financial assumptions are an integral part of a well-written business plan. You can’t accurately forecast the future without them. Invest the time to write solid assumptions so you have a good foundation for your financial forecast.

Download our Ultimate Business Plan Template here

What are Financial Assumptions?

Financial assumptions are the guidelines you give your business plan to follow. They can range from financial forecasts about costs, revenue, return on investment, and operating and startup expenses. Basically, financial assumptions serve as a forecast of what your business will do in the future. You need to include them so that anyone reading your plan will have some idea of how accurate its projections may be.

Of course, your financial assumptions should accurately reflect the information you’ve given in your business plan and they should be reasonably accurate. You need to keep this in mind when you make them because if you make outlandish claims, it will make people less likely to believe any part of your business plan including other financial projections that may be accurate.

That’s why you always want to err on the side of caution when it comes to financial assumptions for your business plan. The more conservative your assumptions are the more likely you’ll be able to hit them, and the less likely you’ll be off by so much that people will ignore everything in your plan.

Why are Financial Assumptions Important?

Many investors skip straight to the financial section of your business plan. It is critical that your assumptions and projections in this section be realistic. Plans that show penetration, operating margin, and revenues per employee figures that are poorly reasoned; internally inconsistent, or simply unrealistic greatly damage the credibility of the entire business plan. In contrast, sober, well-reasoned financial assumptions and projections communicate operational maturity and credibility.

For instance, if the company is categorized as a networking infrastructure firm, and the business plan projects 80% operating margins, investors will raise a red flag. This is because investors can readily access the operating margins of publicly-traded networking infrastructure firms and find that none have operating margins this high.

As much as possible, the financial assumptions should be based on actual results from your or other firms. As the example above indicates, it is fairly easy to look at a public company’s operating margins and use these margins to approximate your own. Likewise, the business plan should base revenue growth on other firms. 

Many firms find this impossible, since they believe they have a breakthrough product in their market, and no other company compares. In such a case, base revenue growth on companies in other industries that have had breakthrough products. If you expect to grow even faster than they did (maybe because of new technologies that those firms weren’t able to employ), you can include more aggressive assumptions in your business plan as long as you explain them in the text.

The financial assumptions can either enhance or significantly harm your business plan’s chances of assisting you in the capital-raising process. By doing the research to develop realistic assumptions, based on actual results of your or other companies, the financials can bolster your firm’s chances of winning investors. As importantly, the more realistic financials will also provide a better roadmap for your company’s success.

    Finish Your Business Plan Today!

Financial assumptions vs projections.

Financial Assumptions – Estimates of future financial results that are based on historical data, an understanding of the business, and a company’s operational strategy.

Financial Projections – Estimates of future financial results that are calculated from the assumptions factored into the financial model.

The assumptions are your best guesses of what the future holds; the financial projections are numerical versions of those assumptions. 

Key Assumptions By Financial Statement

Below you will find a list of the key business assumptions by the financial statement:

Income Statement

The income statement assumptions should include revenue, cost of goods sold, operating expenses, and depreciation/amortization, as well as any other line items that will impact the income statement.

When you are projecting future operating expenses, you should project these figures based on historical information and then adjust them as necessary with the intent to optimize and/or minimize them.

Balance Sheet

The balance sheet assumptions should include assets, liabilities, and owner’s equity, as well as any other line items that will impact the balance sheet. One of the most common mistakes is not including all cash inflows and outflows.

Cash Flow Statement

Cash flow assumptions should be made, but they do not impact the balance sheet or income statement until actually received or paid. You can include the cumulative cash flow assumption on the financial model to be sure it is included with each year’s projections. 

The cumulative cash flow assumption is useful for showing your investors and potential investors how you will spend the money raised. This line item indicates how much of the initial investment will be spent each year, which allows you to control your spending over time.

Notes to Financial Statements

The notes to financial statements should explain assumptions made by management regarding accounting policies, carrying value of long-lived assets, goodwill impairment testing, contingencies, and income taxes. It is important not only to list these items within the notes but also to provide a brief explanation.

What are the Assumptions Needed in Preparing a Financial Model?

In our article on “ How to Create Financial Projections for Your Business Plan ,” we list the 25+ most common assumptions to include in your financial model. Below are a few of them:

For EACH key product or service you offer:

  • What is the number of units you expect to sell each month?
  • What is your expected monthly sales growth rate?

For EACH subscription/membership you offer:

  • What is the monthly/quarterly/annual price of your membership?
  • How many members do you have now or how many members do you expect to gain in the first month/quarter/year?

Cost Assumptions

  • What is your monthly salary? What is the annual growth rate in your salary?
  • What is your monthly salary for the rest of your team? What is the expected annual growth rate in your team’s salaries?
  • What is your initial monthly marketing expense? What is the expected annual growth rate in your marketing expense?

Assumptions related to Capital Expenditures, Funding, Tax and Balance Sheet Items

  • How much money do you need for capital expenditures in your first year  (to buy computers, desks, equipment, space build-out, etc.)
  • How much other funding do you need right now?
  • What is the number of years in which your debt (loan) must be paid back

Properly Preparing Your Financial Assumptions

So how do you prepare your financial assumptions? It’s recommended that you use a spreadsheet program like Microsoft Excel. You’ll need to create separate columns for each line item and then fill in the cells with the example information described below.

Part 1 – Current Financials

Year to date (YTD) units sold and units forecast for next year. This is the same as YTD revenue, but you divide by the number of days in the period to get an average daily amount. If your plan includes a pro forma financial section, your financial assumptions will be projections that are consistent with the pro forma numbers.

Part 2 – Financial Assumptions

Estimated sales forecasts for next year by product or service line, along with the associated margin. List all major items in this section, not just products. For instance, you might include “Professional Services” as a separate item, with revenue and margin information.

List the number of employees needed to support this level of business, including yourself or key managers, along with your cost assumptions for compensation, equipment leasing (if applicable), professional services (accounting/legal/consultants), and other line items.

Part 3 – Projected Cash Flow Statement and Balance Sheet

List all key assumptions like: sources and uses of cash, capital expenditures, Planned and Unplanned D&A (depreciation & amortization), changes in operating assets and liabilities, along with those for investing activities. For example, you might list the assumptions as follows:

  • Increases in accounts receivable from customers based on assumed sales levels
  • Decreases in inventory due to increased sales
  • Increases in accounts payable due to higher expenses for the year
  • Decrease in unearned revenue as evidenced by billings received compared with those projected (if there is no change, enter 0)
  • Increase/decrease in other current assets due to changes in business conditions
  • Increase/decrease in other current liabilities due to changes in business conditions
  • Increases in long term debt (if necessary)
  • Cash acquired from financing activities (interest expense, dividends paid, etc.)

You make many of these assumptions based on your own experience. It is also helpful to look at the numbers for public companies and use those as a benchmark.

Part 4 – Future Financials

This section is for more aggressive financial projections that can be part of your plan, but which you cannot necessarily prove at the present time. This could include:

  • A projection of earnings per share (EPS) using the assumptions above and additional information such as new products, new customer acquisition, expansion into new markets
  • New product lines or services to be added in the second year. List the projected amount of revenue and margin associated with these items
  • A change in your gross margins due to a specific initiative you are planning, such as moving from a high volume/low margin business to a low volume/high margin business

Part 5 – Calculations

Calculate all critical financial numbers like:

  • Cash flow from operating activities (CFO)
  • Operating income or loss (EBITDA)  (earnings before interest, taxes, depreciation, and amortization)
  • EBITDA margin (gross profits divided by revenue less cost of goods sold)
  • Adjusted EBITDA (CFO plus other cash changes like capital expenditure, deferred taxes, non-cash stock compensation, and other items)
  • Net income or loss before tax  (EBT)
  • Cash from financing activities (increase/decrease in debt and equity)

Part 6 – Sensitivity Analysis

If your assumptions are reasonably accurate, you will have a column for “base case” and a column for “worst case.”  If you have a lot of variables with different possible outcomes, just list the potential range in one cell.

Calculate both EBITDA margins and EPS ranges at each level.

Part 7 – Section Highlights

Just list the two or three key points you want to make. If it is hard to distill them down, you need to go back and work on Part 3 until it makes sense.

Part 8 – Financial Summary

Include all the key numbers from your assumptions, section highlights, and calculations. In one place, you can add up CFO, EPS at different levels, and EBITDA margins under both base case and worst-case scenarios to give a complete range for each assumption.

The key to a successful business plan is being able to clearly communicate your financial assumptions. Be sure to include your assumptions in the narrative of your plan so you can clearly explain why you are making them. If you are using the business plan for financing or other purposes, it may also be helpful to include a separate “financials” section so people unfamiliar with your industry can quickly find and understand key information. A business plan generator can help you in creating your financial projections.

How to Finish Your Business Plan in 1 Day!

Don’t you wish there was a faster, easier way to finish your business plan and financial projections?

With Growthink’s Ultimate Business Plan Template you can finish your plan in just 8 hours or less!

It includes a full financial model. It lists all the key financial assumptions and you simply need to plug in answers to the assumptions and your complete financial projections (income statement, balance sheet, cash flow statement, charts and graphs) are automatically generated!

OR, Let Us Develop Your Plan For You

Since 1999, Growthink has developed business plans for thousands of companies who have gone on to achieve tremendous success.

Click here to see how our professional business plan writers can create your business plan for you.

If you just need a financial model for your business plan, learn more about our financial modeling services .  

Other Resources for Writing Your Business Plan

  • How to Write an Executive Summary
  • How to Expertly Write the Company Description in Your Business Plan
  • How to Write the Market Analysis Section of a Business Plan
  • The Customer Analysis Section of Your Business Plan
  • Completing the Competitive Analysis Section of Your Business Plan
  • How to Write the Management Team Section of a Business Plan + Examples
  • How to Create Financial Projections for Your Business Plan
  • Everything You Need to Know about the Business Plan Appendix
  • Business Plan Conclusion: Summary & Recap

Other Helpful Business Plan Articles & Templates

Download a Free Business Plan Template

PlanBuildr Logo

  • Business Planning

Business Plan Financial Projections

Written by Dave Lavinsky

Business Plan Financial Projections

Financial projections are forecasted analyses of your business’ future that include income statements, balance sheets and cash flow statements. We have found them to be an crucial part of your business plan for the following reasons:

  • They can help prove or disprove the viability of your business idea. For example, if your initial projections show your company will never make a sizable profit, your venture might not be feasible. Or, in such a case, you might figure out ways to raise prices, enter new markets, or streamline operations to make it profitable. 
  • Financial projections give investors and lenders an idea of how well your business is likely to do in the future. They can give lenders the confidence that you’ll be able to comfortably repay their loan with interest. And for equity investors, your projections can give them faith that you’ll earn them a solid return on investment. In both cases, your projections can help you secure the funding you need to launch or grow your business.
  • Financial projections help you track your progress over time and ensure your business is on track to meet its goals. For example, if your financial projections show you should generate $500,000 in sales during the year, but you are not on track to accomplish that, you’ll know you need to take corrective action to achieve your goal.

Below you’ll learn more about the key components of financial projections and how to complete and include them in your business plan.

What Are Business Plan Financial Projections?

Financial projections are an estimate of your company’s future financial performance through financial forecasting. They are typically used by businesses to secure funding, but can also be useful for internal decision-making and planning purposes. There are three main financial statements that you will need to include in your business plan financial projections:

1. Income Statement Projection

The income statement projection is a forecast of your company’s future revenues and expenses. It should include line items for each type of income and expense, as well as a total at the end.

There are a few key items you will need to include in your projection:

  • Revenue: Your revenue projection should break down your expected sales by product or service, as well as by month. It is important to be realistic in your projections, so make sure to account for any seasonal variations in your business.
  • Expenses: Your expense projection should include a breakdown of your expected costs by category, such as marketing, salaries, and rent. Again, it is important to be realistic in your estimates.
  • Net Income: The net income projection is the difference between your revenue and expenses. This number tells you how much profit your company is expected to make.

Sample Income Statement

2. cash flow statement & projection.

The cash flow statement and projection are a forecast of your company’s future cash inflows and outflows. It is important to include a cash flow projection in your business plan, as it will give investors and lenders an idea of your company’s ability to generate cash.

There are a few key items you will need to include in your cash flow projection:

  • The cash flow statement shows a breakdown of your expected cash inflows and outflows by month. It is important to be realistic in your projections, so make sure to account for any seasonal variations in your business.
  • Cash inflows should include items such as sales revenue, interest income, and capital gains. Cash outflows should include items such as salaries, rent, and marketing expenses.
  • It is important to track your company’s cash flow over time to ensure that it is healthy. A healthy cash flow is necessary for a successful business.

Sample Cash Flow Statements

3. balance sheet projection.

The balance sheet projection is a forecast of your company’s future financial position. It should include line items for each type of asset and liability, as well as a total at the end.

A projection should include a breakdown of your company’s assets and liabilities by category. It is important to be realistic in your projections, so make sure to account for any seasonal variations in your business.

It is important to track your company’s financial position over time to ensure that it is healthy. A healthy balance is necessary for a successful business.

Sample Balance Sheet

How to create financial projections.

Creating financial projections for your business plan can be a daunting task, but it’s important to put together accurate and realistic financial projections in order to give your business the best chance for success.  

Cost Assumptions

When you create financial projections, it is important to be realistic about the costs your business will incur, using historical financial data can help with this. You will need to make assumptions about the cost of goods sold, operational costs, and capital expenditures.

It is important to track your company’s expenses over time to ensure that it is staying within its budget. A healthy bottom line is necessary for a successful business.

Capital Expenditures, Funding, Tax, and Balance Sheet Items

You will also need to make assumptions about capital expenditures, funding, tax, and balance sheet items. These assumptions will help you to create a realistic financial picture of your business.

Capital Expenditures

When projecting your company’s capital expenditures, you will need to make a number of assumptions about the type of equipment or property your business will purchase. You will also need to estimate the cost of the purchase.

When projecting your company’s funding needs, you will need to make a number of assumptions about where the money will come from. This might include assumptions about bank loans, venture capital, or angel investors.

When projecting your company’s tax liability, you will need to make a number of assumptions about the tax rates that will apply to your business. You will also need to estimate the amount of taxes your company will owe.

Balance Sheet Items

When projecting your company’s balance, you will need to make a number of assumptions about the type and amount of debt your business will have. You will also need to estimate the value of your company’s assets and liabilities.

Financial Projection Scenarios

Write two financial scenarios when creating your financial projections, a best-case scenario, and a worst-case scenario. Use your list of assumptions to come up with realistic numbers for each scenario.

Presuming that you have already generated a list of assumptions, the creation of best and worst-case scenarios should be relatively simple. For each assumption, generate a high and low estimate. For example, if you are assuming that your company will have $100,000 in revenue, your high estimate might be $120,000 and your low estimate might be $80,000.

Once you have generated high and low estimates for all of your assumptions, you can create two scenarios: a best case scenario and a worst-case scenario. Simply plug the high estimates into your financial projections for the best-case scenario and the low estimates into your financial projections for the worst-case scenario.

Conduct a Ratio Analysis

A ratio analysis is a useful tool that can be used to evaluate a company’s financial health. Ratios can be used to compare a company’s performance to its industry average or to its own historical performance.

There are a number of different ratios that can be used in ratio analysis. Some of the more popular ones include the following:

  • Gross margin ratio
  • Operating margin ratio
  • Return on assets (ROA)
  • Return on equity (ROE)

To conduct a ratio analysis, you will need financial statements for your company and for its competitors. You will also need industry average ratios. These can be found in industry reports or on financial websites.

Once you have the necessary information, you can calculate the ratios for your company and compare them to the industry averages or to your own historical performance. If your company’s ratios are significantly different from the industry averages, it might be indicative of a problem.

Be Realistic

When creating your financial projections, it is important to be realistic. Your projections should be based on your list of assumptions and should reflect your best estimate of what your company’s future financial performance will be. This includes projected operating income, a projected income statement, and a profit and loss statement.

Your goal should be to create a realistic set of financial projections that can be used to guide your company’s future decision-making.

Sales Forecast

One of the most important aspects of your financial projections is your sales forecast. Your sales forecast should be based on your list of assumptions and should reflect your best estimate of what your company’s future sales will be.

Your sales forecast should be realistic and achievable. Do not try to “game” the system by creating an overly optimistic or pessimistic forecast. Your goal should be to create a realistic sales forecast that can be used to guide your company’s future decision-making.

Creating a sales forecast is not an exact science, but there are a number of methods that can be used to generate realistic estimates. Some common methods include market analysis, competitor analysis, and customer surveys.

Create Multi-Year Financial Projections

When creating financial projections, it is important to generate projections for multiple years. This will give you a better sense of how your company’s financial performance is likely to change over time.

It is also important to remember that your financial projections are just that: projections. They are based on a number of assumptions and are not guaranteed to be accurate. As such, you should review and update your projections on a regular basis to ensure that they remain relevant.

Creating financial projections is an important part of any business plan. However, it’s important to remember that these projections are just estimates. They are not guarantees of future success.

Business Plan Financial Projections FAQs

What is a business plan financial projection.

A business plan financial projection is a forecast of your company's future financial performance. It should include line items for each type of asset and liability, as well as a total at the end.

What are annual income statements? 

The Annual income statement is a financial document and a financial model that summarize a company's revenues and expenses over the course of a fiscal year. They provide a snapshot of a company's financial health and performance and can be used to track trends and make comparisons with other businesses.

What are the necessary financial statements?

The necessary financial statements for a business plan are an income statement, cash flow statement, and balance sheet.

How do I create financial projections?

You can create financial projections by making a list of assumptions, creating two scenarios (best case and worst case), conducting a ratio analysis, and being realistic.

  • Search Search Please fill out this field.
  • Wealth Management

Financial Plan vs. Financial Forecast: What's the Difference?

J.B. Maverick is an active trader, commodity futures broker, and stock market analyst 17+ years of experience, in addition to 10+ years of experience as a finance writer and book editor.

financial outlook in business plan

Financial Plans vs. Financial Forecasts: An Overview

A financial forecast is an estimation, or projection, of likely future income or revenue and expenses, while a financial plan lays out the necessary steps to generate future income and cover future expenses. Alternatively, a financial plan can be looked at as what an individual or company plans to do with income or revenue received.

While both processes orient financial activity toward the future, a financial plan is a road-map drafted now that can be followed over time and a financial forecast is a projection or estimate of future outcomes predicted today.

Key Takeaways

  • A financial plan is a strategic approach to finances that marks out a road-map to follow into the future.
  • A financial forecast is an estimate of future outcomes arrived at using one of several methods, including statistical models to make projections.
  • Both businesses and individuals can make use of financial plans and financial forecasts.

Financial Plans

A financial plan is a process a company lays out, typically broken down into a step-by-step format, for utilizing its available capital and other assets to meet its goals for growth or profit based on a reasonable financial forecast. A financial plan can be considered synonymous with a business plan in that it lays out what a company plans to do in terms of putting resources to work to generate maximum possible revenues.

Individuals can also take advantage of a financial plan. An annual financial plan is a guidebook of sorts that tells you where you’re at financially right now, what your goals are looking ahead and what areas or issues need to be addressed so that you can meet those goals. The plan covers every aspect of your financial life, from  investing  to  taxes  to your outlook for  retirement . While your starting point in developing your plan may be different based on your age, income, debts, and  assets , the most important components of an annual financial plan are the same.

Financial Forecasts

Financial forecasting is critical for business success. To effectively manage working capital and cash flow , a company must have a reasonable idea of how much revenue it plans to receive over a given time period and what its necessary expenses will be over that same period of time. Financial forecasts are commonly reviewed and revised annually as new information regarding assets and costs becomes available. The new data enables an individual or business to make more accurate financial projections. It is easier for established companies that generate steady revenues to make accurate financial forecasts than it is for new businesses or companies whose revenue is subject to significant seasonal or cyclical fluctuations.

For an individual, a financial forecast is an estimate of his income and expenses over a period of time. Based on that forecast, the individual can then construct a financial plan that includes saving, investing, or planning for obtaining additional income to augment his personal finances—as well as anticipating expenditures that would deplete them.

U.S. Small Business Administration. " Write Your Business Plan ."

PennState Extension. " Developing a Business Plan ."

Harvard Business School. " 7 Financial Forecasting Methods to Predict Business Performance ."

financial outlook in business plan

  • Terms of Service
  • Editorial Policy
  • Privacy Policy
  • Your Privacy Choices
  • English English
  • தமிழ் தமிழ்
  • বাংলা বাংলা
  • മലയാളം മലയാളം
  • ગુજરાતી ગુજરાતી
  • हिंदी हिंदी
  • मराठी मराठी
  • Business Business
  • बिज़नेस बिज़नेस
  • Insurance Insurance

The Financial Express

  • Elections Results 2024 Live
  • India Election Results 2024 Live Updates
  • AP Loksabha Election Live
  • Telangana Election Live
  • UP, UK Election Result 2024 Live
  • Election Results Live Streaming
  • Bihar, Jharkhand Election 2024 Live
  • Maharashtra ,Goa Election 2024 Live
  • Gujarat Election 2024 Live
  • Rajasthan Lok Sabha Election Result Live
  • West Bengal Election Live
  • MP,Chhattisgarh Election Live
  • Assam,Sikkim Election Live
  • AP Assembly Election Live
  • Karnataka Election Live
  • Kerala Election Live
  • Tamil Nadu Election Live
  • Loksabha Election
  • Budget 2024
  • Stock Market Quotes
  • Mutual Fund
  • Stock Stats
  • Top Gainers
  • CaFE Invest
  • Investing Abroad
  • Gold Rate in India
  • Silver Rate in India
  • Petrol Rate in India
  • Diesel Rate in India
  • Express Mobility
  • Banking & Finance
  • Mutual Funds
  • Travel & Tourism
  • Brand Wagon
  • Entertainment
  • Web Stories
  • Auto Web Stories
  • Infographics
  • Today’s Paper
  • International
  • Edits & Columns
  • Personal Finance Print
  • PRIVACY POLICY
  • TERMS AND CONDITIONS

financial outlook in business plan

Election 2024 Results: Continuity or change? Corporate India speaks on the 2024 poll results

Industry leaders and economists said that while india’s economy is projected to grow at 6.8 per cent in fy25, surpassing other major global economies, all eyes are on the new government that will give further impetus to the current growth momentum..

Election 2024 Live Updates, bse, nse, election 2024, lok sabha elections, exit polls, lok sabha election results, corporate India, India Inc, policy continuity, reform, economy, economic growth, GDP, GDP growth, global economies, economic expansion, infrastructure, investment

With the BJP-led NDA ahead in 295 seats while the Congress-led INDIA bloc leading in 229 seats, India Inc is betting on policy continuity across sectors. Industry leaders and economists said that while India’s economy is projected to grow at 6.8 per cent in FY25, surpassing other major global economies, all eyes are on the new government that will give further impetus to the current growth momentum. A potential third term for the NDA government would ensure continuity in India’s socio-political and economic landscape. The country’s anticipated GDP growth from $3.5 trillion to $7 trillion by 2030 can be sustained without significant changes in circumstances. 

Industry and economic experts believe that the sustained economic expansion will enhance India ’s appeal to global corporations, firmly establishing its position as a prominent hub for launching Global Capability Centres (GCC) and manufacturing facilities.

financial outlook in business plan

“Witnessing the world’s largest democracy choose its leadership is a significant event, crucial for India ‘s economic growth. I firmly believe that the new government will focus on the education sector, particularly prioritizing infrastructure development like better internet connectivity. This will bridge the digital divide by making technology accessible nationwide.

Democratizing education and empowering learners with AI-powered education is essential for realizing India’s vision of a Viksit Bharat. By investing in education and technology, the new government, in collaboration with the edtech sector, can lay the foundation for this vision. To ensure ‘Baccha Seekha Ki Nahi’, improving overall educational standards is imperative for fostering quality education even in our 2 and 3 cities.”

“Investors like certainty and continuation of policies. India is a long term structural growth story. A lot of elements are in place. Over anything the economics should prevail. We are already in top in factors like GDP, market cap, demographic dividend etc. It will be an endeavour for all the policy makers to take the country to further heights. I don’t think any derailment on these efforts is in anybody’s interest. As a country we have seen many regime changes. Businesses and markets have weathered all of it and good businesses have always rewarded the investors. If valuations get more reasonable from here on because of some factors, more the reason to invest in India further.”

“Markets have reacted sharply to the initial trends of the NDA leading on around 290 seats which look way behind the exit polls which were projecting around 350-370 seats. With the NDA still looking to form a government, though with the important support of coalition partners, markets look jittery about the prospects of strong decision making. Markets believe that the reformistic approach, which was a hallmark of the previous two terms, might take a backseat in the third term. However, our sense is that it is still early to jump to conclusions and should ideally wait for a clearer picture.”

“The tighter-than-expected race to the Centre led to a correction in India ’s financial markets. Given that markets had run ahead of itself, the valuations look more promising after today’s correction. Even as the mandate is weaker than expected and with counting underway, the BJP -led NDA alliance is seen forming the government. With the NDA alliance partnering for a third term, we see policy continuity in the milieu of India’s robust macroeconomic fundamentals. Besides, a narrow margin victory for the BJP on its own could lead to faster required reforms which will further support India’s growth story. The banking and financial sector, at large, is expected to grow and contribute only positively to the growth story as we expect policy continuity under the BJP-led alliance for the third time, even with a weaker individual party victory.”

Siddarth Bhamre, Head of Research at Asit C Mehta Investment Interrmediates Ltd, said, “ BJP falling short of a complete majority won’t stop NDA from forming a new government along with its key allies. Stock markets have been expecting a complete majority for the BJP and a thumping victory for the NDA. Exit polls too cemented the expectations. Markets had factored in the best possible outcome and valuations are rich. However, the market is aware of the challenges associated with the coalition government. Now with election results not being one-sided, we are witnessing profit booking. We believe this profit booking may continue for some more time. Spaces like FMCG and IT may see less damage as defensive buying along with valuation comfort may keep them immune to this correction. Though we expect some correction to continue in the market, it would not be fair to consider it as the end of the bull market. Most likely this correction may turn out to be a hiccup in the long-term bull run.”

Badal Yagnik, CEO, Colliers India , said, “The real estate sector expects continuation of structural reforms and policy support from the new Central government. RERA & GST implementation, national policies specific to logistic parks & data centers and overall infrastructure push in the form of National Infrastructure Pipeline & Gati Shakti National Master Plan have instilled a sense of confidence amongst various real estate stakeholders in the last decade. These long-term measures to balance growth while maintaining fiscal discipline will be pivotal to drive equitable public & private investment in the economy . A progressive and an economically viable vision is inevitable if the real estate sector is to reach a USD 1 trillion market , forming 13-15% of the country’s GDP by 2030.”

Shrinivas Rao, FRICS, CEO, Vestian, said, “The real estate market sentiments are optimistic as the stock market is moving northward, especially the BSE Realty Index which has crossed 8,400, reaching the highest level since 2008. Furthermore, it has grown by 4-5% in the past five days on the back of positive expectations from the newly elected government. We expect the newly elected government’s uninterrupted focus on infrastructure development and a boost to affordable housing in the coming years. Moreover, the real estate sector should be allocated industry status to ease the availability of funds and increase the participation of foreign investors.”

Amit Goyal, Managing Director, India Sotheby’s International Realty, said, “The return of an existing government to power positively impacts the Indian economy and the real estate sector. Political stability significantly enhances confidence among both consumers and investors. We are a young country, poised to become the third largest global economy by 2027, and demand for homes is inevitably going to remain strong, now that we have stability on the policy front and continued focus on infrastructure development. The growing number of affluent in the country, particularly benefits the luxury segment of real estate and we expect the buoyancy to continue. We do believe that several of the measures brought in by the BJP led government such as RERA need far more fine tuning, to be effective in spirit. NDA 3.0 will also be presenting the union budget soon, and this will be an opportune time to relook at the GST burden on under-construction homes, and increase the tax breaks on home loans, to encourage wider home ownership.”

Dr Manoranjan Sharma, Chief Economist, Infomerics Ratings, said, “The election tally was markedly different from the numbers prophesied by the exit pollsters and well below our expectations. The BJP number was disappointing. There is, however, no doubt that BJP with its allies will form the government as they are still well over the magic number of 272, i.e., the majority mark. In the wake of a BJP-led coalition government now, the market fell steeply today. But once this knee-jerk reaction is over, we expect the market to regain a strong footing and macro policies to gain traction with an accent on policy continuity and execution. There could, however, be some unease and uncertainty in the interregnum.”

Jyoti Bhandari, Founder and CEO, Lovak Capital, said, “It’s great to experience the world’s largest democracy making a decision and choosing their leadership. Hope the winning party continues to focus on economic growth and bringing out favourable policies for capital markets stakeholders. The key would be consistency and stability on the table. Investors often react based on expectations for economic reforms, infrastructure development, and stability. Generally, a decisive win by a party with pro-business policies can boost investor confidence, leading to positive movements in the stock market and potentially stimulating economic growth. We may see uncertainty or short-term volatility until the market adjusts to the new political landscape. However, these times could be good times for long term investors to buy in their favourite stocks/sectors at reasonable prices.”

“Over the years the government brought numerous rules and policies but the majority of them had gaps and loopholes which did create a negative impact on the real estate industry . However, the pandemic turned out to be revolutionary for real estate. In the past 2 years, the real estate sector has seen (2-3)x jump in their investment on ROI and this has never happened before and a lot of credit goes to the norms and policies brought by the government. And with the new government coming we anticipate that in the next 2-3 years there will be much to see in the real estate industry at both investment and sentiment levels.”

Jaideep Kewalramani, COO & Head of Employability Business, TeamLease Edtech, said “The new government must make it a priority to capitalize the trifecta of Demographic, Digital and AI dividend to forge an unprecedented growth pivot for Viksit Bharat. India will probably be the only nation to become Developed in the age of Digital and AI. Creating policy support to attract enormous investments in R&D to overcome the tech debt in these areas will be the first order followed by rejuvenating the Higher Education ecosystem. Undergraduates and Working professionals must be encouraged to acquire work integrated degrees that will improve their know-how and industry relevance. Moving the needle on the GER (Gross Enrolment Ratio) from ~29% to 50% by 2035 will require innovation in employability oriented Industry Academia partnerships that enable talent supply chains for corporate India.”

“Viksit Bharat is a visionary initiative by Modiji to make India a developed nation as we complete 100 years of Independence in 2047. The vision encompasses different growth aspects, including socioeconomic development, environmental sustainability, and good governance. Well, for any country to grow and progress, citizens need to be healthy. Now, as we see, several initiatives have been taken by the Indian Government in the healthcare sector and India’s health policies since independence have made significant strides in improving healthcare infrastructure, disease control, maternal and child health, and health insurance . However, challenges persist in ensuring equitable access to healthcare based on geographical boundaries, addressing the growing burden of non-communicable diseases, expanding mental health services, enhancing the skilled healthcare workforce, and fully implementing digital health initiatives. Prioritizing preventive health measures is crucial for a healthier Bharat. Emphasizing regular health checks, vaccination, healthier lifestyles, and early intervention is essential to ensure the well-being of all age groups and control rising health issues from an early age. If the allocated healthcare budget is spent in the necessary areas in the coming years, we can definitely take a leap towards a Healthier Bharat, a Developed Bharat, by 2047.”

“In the aftermath of the 2024 election , India ‘s drone and agritech industries stand at a critical juncture, weighing the balance between continuity and change. While continuity offers stability and familiar ground for innovation, the call for change beckons with promises of disruptive solutions and heightened efficiency. As these sectors navigate this duality, they must leverage data-driven insights and agile strategies to drive growth. With the drone market projected to reach $1.2 billion by 2024 and agritech investments on the rise, the stakes are high for these industries to chart a course that honors tradition while embracing the winds of change. Furthermore, as India continues to shine on the global stage, it’s imperative for the government to focus on implementing and generating opportunities for rural areas, ensuring inclusive development, growth and prosperity.”

Gaurav Batra, CEO and Founder, Infinite Group, said, “With the new government, we anticipate enhanced support for the study abroad sector, recognising its critical role in shaping global leaders. We expect policies that facilitate easier access to international education opportunities, including streamlined visa processes, increased scholarships, and loan options. We also expect the policymakers to ensure Indian students have the resources and support needed to pursue their dreams abroad. By fostering international academic partnerships and enhancing the global mobility of students, we can contribute to a more inclusive and prosperous global community.”

“We expect a strategic emphasis on integrating financial literacy and advanced accounting skills into the mainstream curriculum, ensuring that students are well-prepared for the demands of the global economy . Additionally, we hope for increased support for digital learning platforms through better internet connectivity and technology grants, particularly in underserved regions. By fostering a robust partnership between the government and the edtech sector, we can collectively elevate the standards of financial education in India and empower the next generation of finance professionals.”

“The early trends and the exit polls for the recently concluded elections for the 18th Lok Sabha elections anticipated continuity of ongoing policies by the incumbent government. The real estate sector also seeks an assurance of predictability for this reason. The current government had, over the last two terms, made significant strides on the policy front, and in the development of the nation. The economy grew with major investments into developing the country. The real estate industry always looks towards a stable government that will ensure no interruptions in the ongoing schemes and investments into infrastructure development. This, above everything else, unleashes the real estate potential of current and developing geographies.

With government continuity, we can look forward to a major boost for the affordable housing sector, this being a flagship scheme that had not fared well over the last term.

Industrial and logistics parks, along with warehousing, will also look forward to further support for growth, with a massive potential for increased demand to be met in this sector thanks to an increased focus on manufacturing and improved connectivity.

Tourism and hospitality had also emerged as a bigger focus area for the government, as strongly indicated by the preliminary announcements in the interim budget earlier this year. This industry, too, looks forward to these plans being implemented as planned.

A stable government with a strong focus on development and increased expenditure to build assets reinforces the confidence of global investors who are hoping for a wider spread of options in India . Simultaneously, a strong opposition is always supportive of a vibrant democracy.”

– Anuj Puri, Chairman, ANAROCK Group

Rishabh Goel, co-founder & CEO, Credgenics, said, “The emphasis on ‘Viksit Bharat’ opens up new opportunities for technology companies that thrive on strategic vision, collaboration, and innovation. We expect the new Government to facilitate further expansion of the digital ecosystem while addressing key challenges such as interoperability, policy frameworks, cybersecurity, financial literacy, and the digital divide. This will empower fintechs to provide out-of-the-box financial solutions to a broader audience, catalyze financial inclusion, and fast-track the adoption of AI and ML capabilities. We look forward to policies that further enable ease of doing business, nurture tech- startups with sustained access to funding, and safeguard the intellectual property. We are confident that the focus on sustainable infrastructure development, large-scale skill enhancement, and bridging the gaps in digital connectivity will provide the necessary impetus for businesses to scale and thrive.”

Seema Bhardwaj, Director Principal, St. Angel’s Group of Schools, said, “I believe that the upcoming general elections hold significant potential for the education sector in India . Regardless of which government comes to power, it is imperative that they prioritize education reforms that address critical issues such as student dropout rates and curriculum disparities. A government committed to strengthening our education system can create policies that foster a nurturing learning environment, integrate comprehensive curriculums, and ensure equitable access to quality education. This will not only benefit our students but also prepare a skilled and knowledgeable workforce that is essential for the growth and development of corporate India. By investing in education, the new government can lay the foundation for a prosperous future, where both the public and private sectors can thrive together.”

Darshil Shah, Founder and Director, TreadBinary, said, “With the emergence of a new government, we are poised for transformative growth. We expect the government to take a proactive approach in enhancing India ‘s startup ecosystem. Prioritizing privacy and data security, regulations for the Digital Personal Data Protection Act (DPDPA) and amendment to the IT rules addressing crucial issues like AI-driven misinformation and deep fakes, serving as a stopgap until a comprehensive Digital India Act is developed. Promoting innovation, and enabling Indian companies and startups to achieve global prominence is also one of the major expectations from the new government.”

Jyoti Prakash Gadia, Managing Director at Resurgent India , said, “As the trends are emerging, the landslide victory as predicted by the exit polls does not seem to be happening.This is likely to make the government to have second thoughts on the difficult economic reforms and the same may not be as aggressive as earlier anticipated. However, the emphasis may shift partly to ground level welfare schemes and employment generation. Overall growth trajectory may however remain stable with emphasis on infrastructure development which may emerge as a consensus strategy in the long run.”

Anil Rego, Founder and Fund Manager at Right Horizons, said, “Large-cap valuations appear favorable for the near term, while small and mid-cap stocks (SMIDs) are expected to outperform over the long term. Sectors such as manufacturing, banking, power, consumer, and capital goods are poised for strong performance. Although markets have already rallied post-exit polls, any further upside post- election results is likely to be capped. Volatility due to the ruling party securing fewer seats than anticipated should be seen as a buying opportunity for select bottom- up ideas. Regardless of election and budget outcomes, staying invested is advisable as the fundamentals favor long-term investors.”

Mathew Chacko, Partner, Spice Route Legal, said, “We expect the DPDPA to be a priority for the new government – the NDA has expressly said this (and the opposition has also indicated the same). We expect the data protection board to be set up , rules to be issued, clarifications made and the law to be operational by the end of the year.”

Saurabh Rai, CEO, Arahas Technologies, said, “The new Indian government to prioritize policies that foster innovation and sustainability, particularly in the geospatial technology sector, while also enhancing disaster management capabilities. We seek a regulatory environment that simplifies business operations, promotes digital infrastructure, and encourages investment in green technologies. Additionally, we advocate for enhanced support for research and development initiatives, improved access to financing for tech-driven enterprises, and robust disaster management systems that leverage cutting-edge geospatial technology for early warning and efficient response. By collaborating closely with industry leaders and streamlining regulatory frameworks, the government can help propel India towards a future where technological advancement, environmental stewardship, and effective disaster management go hand in hand.”

The sectors that are likely to witness a significant uptick in the medium term are, Renewable Energy, Healthcare, Insurance, Defence, Construction, Railways, Housing and Real Estate and Agriculture, said Acuité Ratings & Research.

India has just concluded the largest ever general elections in its history which lasted over a 44 day period to elect a new government through 543 parliamentary constituencies. The outcome of the elections will be known shortly. There is a significant expectation in the markets that the current government will be re-elected for the third time although the margin for majority remains an uncertain aspect at this point in time.

The existing government has formalized plans and strategies to enhance the growth prospects for India over the next five years through a 100 Day Blueprint. The economy has seen a bumper GDP growth of 8.2% in FY24 driven by robust public investments and a strong revival in the industrial sector. While most of the forecasts for economic growth in the current year are below or at 7.0% given the base factor that is likely to catch up , the government is optimistic that it can average a GDP growth between 7%-8% in the next five years.

The re-elected government will not just endeavour to propel India’s GDP and growth figures but also take the country towards those milestones and metrics that will help us become a developed nation by 2047 (Amrit Kal).

“ India will be on the trajectory of becoming one of the fastest-growing economies, with forecasts predicting robust economic growth from 2024-2028. It is reassuring to be optimistic about the country’s future, especially with a stable and growth-oriented government in place, despite the global and regional conflicts, financial uncertainties, and other prevailing threats. To sustain this growth momentum, the government must advance reforms for key sectors including the clean energy sector by prioritizing renewables, investing in innovation and technology , and promoting public-private partnerships to build a better, generating more jobs , cleaner, and more sustainable India for generations to come.

We expect the government to introduce robust frameworks to address issues such as high capital and operational costs, through low-cost funding and risk-sharing facilities in the renewables sector. A framework for a grid system, like solar, would allow CBG production in one location and off-take in another, while maintaining the green properties of the molecule. Focus on promoting use of Fermented Organic Manure (FOM) will help boost soil health and regenerative agriculture. Such initiatives are vital for enhancing production and distribution, thus strengthening the overall sector. Additionally, we expect the new term to take up the crucial task of increasing CBG induction in the renewable fuel landscape. New government needs to make India as the next renewable hub and economic power.”

To foster further investments in the oil & gas industry we look forward to the following major positive developments from the new government:

– Bringing petroleum products under GST ensures a uniform tax structure across states, reduces complexity, cascading effect & multiplicity of taxes, and reduces RSP for end-customers.

– Support investments in the petrochemical industry in the form of PLI, capital subsidy, export benefits, and tax breaks can further boost the investment cycle and compete in the international markets even as India develops itself as a global manufacturing hub.

– The industry is at the cusp of a generational transformation and will form a major contributor to the decarbonization goals set by India. As we transition into a greener energy ecosystem with bio-fuels and green hydrogen integration in our manufacturing processes, increased financial support until economies of scale are achieved will help accelerate the adoption.

“In the overarching context of cheer, ubiquitous optimism and cheer, we see strategically significant sectors like infrastructure, manufacturing, BFSI, consumer discretionary, PSUs “military-industrial complex”, space technology , logistics , fintech and artificial intelligence (AI) outperforming. With stability and policy continuity as the guiding mantra, sectors, such as, financials, consumer discretionary, industrials/infrastructure and PSUs are also likely to gain,” said Dr Manoranjan Sharma, Chief Economist, Informerics Ratings.

“With a clear consensus on the BJP victory and all the exit polls unequivocally showing a steamroller BJP victory, BJP seems to be well and truly home. A certain BJP victory stems from committed cadre, beneficiary-centered programmes, disjointed opposition, fragile index of opposition unity and the TINA (there is no alternative) factor. In this post results scenario, we see a spike in the stock market and the stock market rising to newer and greater heights.”

  • Stock Market Stats

Related News

shorts

BJP leader Navneet Kaur Rana is trailing while Congress’s Balwant Wankhade is leading in the current election. Rana, a former actress turned politician, won as an independent candidate in the 2019 Lok Sabha Elections with the support of Congress and NCP. However, her recent arrest for reciting hanuman chalisa in front of Maharashtra’s CM’s residence may be the reason for her current struggle.

Photo Gallery

15 Lok Sabha Election 2024: No 400-paar for BJP; INDIA bloc stuns NDA – PHOTOS

21 Anubhuti coaches with aircraft-like features to replace Shatabdi 1st-AC Executive chair cars; 20 amazing facts

9 Rs 50, Rs 200, Rs 500 and Rs 2000 notes images: Here are the new currency notes released by RBI

Latest News

money, Rupee, growth

India will keep growing irrespective of who leads the nation 

Tata Capital 

Tata Motors Finance to be merged with Tata Capital 

financial outlook in business plan

Book Review | India’s Odyssey: From a developing country to an emerging superpower

Bill Gates, Elon Musk, Jeff Bezos, Bernard Arnault, Bernard Arnault net worth, The top 10 richest people in the world in 2024, who are The top 10 richest people in the world in 2024

Elon Musk with $210 billion to Bill Gates with $129 billion: The top 10 richest people in the world in 2024

Stock Market

Markets to go back to the basics

Trending topics.

  • IPO’s Open and Upcoming 5
  • Top Indices Performance
  • Stock Analysis
  • Financial Literacy
  • Gold Rate Today
  • NSE Top Gainers 150
  • NSE Top Losers 2450
  • BSE Top Gainers 562
  • BSE Top Losers 3528
  • NSE 52-Week High 0
  • NSE 52-Week Low 0
  • BSE 52-Week High 0
  • BSE 52-Week Low 0
  • NSE Price Shocker
  • NSE Volume Shocker
  • BSE Price Shocker
  • BSE Volume Shocker
  • NSE Sellers
  • BSE Sellers
  • Silver Rate Today
  • Petrol Rate Today
  • Diesel Rate Today

Facebook Pixel Code

IMAGES

  1. Financial forecast example for new businesses and startups

    financial outlook in business plan

  2. Small Business Financial Plan Template

    financial outlook in business plan

  3. What Is The Financial Plan In A Business Plan

    financial outlook in business plan

  4. 50 Professional Financial Plan Templates [Personal & Business] ᐅ

    financial outlook in business plan

  5. 50+ Essential Business Report Examples with Templates

    financial outlook in business plan

  6. 4 Options to Create Financial Forecasts For Your Startup

    financial outlook in business plan

VIDEO

  1. Our Economic and Financial Outlook for 2024

  2. Outlook Money 40After40

  3. Outlook Money 40After40

  4. Market Outlook as on 30th April 2024

  5. ECONOMIC OUTLOOK

  6. What is financial planning and why should I create a plan?

COMMENTS

  1. How To Create Financial Projections for Your Business Plan

    Collect relevant historical financial data and market analysis. Forecast expenses. Forecast sales. Build financial projections. The following five steps can help you break down the process of developing financial projections for your company: 1. Identify the purpose and timeframe for your projections.

  2. How to Write the Financial Section of a Business Plan

    Use the numbers that you put in your sales forecast, expense projections, and cash flow statement. "Sales, lest cost of sales, is gross margin," Berry says. "Gross margin, less expenses, interest ...

  3. How to Create a Financial Forecast for a Startup Business Plan

    A sales forecast shows investors and lenders that you have a solid understanding of your target market and a clear vision of who will buy your product or service. A sales forecast typically breaks down monthly sales by unit and price point. Beyond year two of being in business, the sales forecast can be shown quarterly, instead of monthly.

  4. How to Write a Financial Plan: Budget and Forecasts

    Here is everything you need to include in your financial plan, along with optional performance metrics, funding specifics, mistakes to avoid, and free templates. Key components of a financial plan. A sound financial plan is made up of six key components that help you easily track and forecast your business financials. They include your:

  5. How to Make Financial Projections for Business

    A financial projection is a group of financial statements that are used to forecast future performance. Creating financial projections can break down into 5 simple steps: sales projections, expense projections, balance sheet projections, income statement projections, and cash flow projections. Financial projections can offer huge benefits to ...

  6. Writing a Business Plan—Financial Projections

    The financial section of your business plan should include a sales forecast, expenses budget, cash flow statement, balance sheet, and a profit and loss statement. Be sure to follow the generally accepted accounting principles (GAAP) set forth by the Financial Accounting Standards Board, a private-sector organization responsible for setting ...

  7. Financial Projections for Startups and Small Businesses

    Business Plan: Financial projections and business plans go hand-in-hand. It's a way to show that your company is stable and is financially successful. It's a good practice to provide quarterly or monthly projections for the first year and annual projections for the four years after that. These include projected income statements, balance ...

  8. Financial forecast example for new businesses and startups

    The financial forecast is an essential step when creating a business plan. The financial forecast allows you to anticipate the revenues and expenses of your new business over a given period. Even if the exercise is sometimes delicate to carry out, it is nevertheless essential for any entrepreneur. Indeed, it allows you to define quantified ...

  9. How to make financial projections for a new business

    Here are the steps to create your financial projections for your start-up. 1. Project your spending and sales. As you develop your business plan, list the key expenditures you will need to make to get your company off the ground and your subsequent costs to operate. Be sure to include recurring expenses—salaries, rent, gas, insurance ...

  10. How to Create Financial Projections for Your Business Plan

    Financial projections are forecasts or estimations of your company's future revenues and expenses, serving as a crucial part of business planning. To complete them you must develop multiple assumptions with regards to items like future sales volumes, employee headcount and the cost of supplies and other expenses.

  11. Business Plan Financial Projections: How To Create Accurate Targets

    1. Start with a Sales Projection. A sales forecast is the first step in creating your income statement. You can start with a one, three, or five-year projection, but keep in mind that, without historical financial data, accuracy may decrease over time.

  12. Write your business plan

    Provide a prospective financial outlook for the next five years. Include forecasted income statements, balance sheets, cash flow statements, and capital expenditure budgets. For the first year, be even more specific and use quarterly — or even monthly — projections. ... Example lean business plan. Before you write your business plan, read ...

  13. Free Financial Projection and Forecasting Templates

    Download a Blank Financial Forecast Template for. Excel | Google Sheets. This template is perfect for businesses that require a detailed and all-encompassing forecast. Users can input various financial data, such as projected revenues, costs, and market trends, to generate a complete financial outlook.

  14. Business Plan Financial Templates

    This financial plan projections template comes as a set of pro forma templates designed to help startups. The template set includes a 12-month profit and loss statement, a balance sheet, and a cash flow statement for you to detail the current and projected financial position of a business. ‌. Download Startup Financial Projections Template.

  15. 7 Financial Forecasting Methods to Predict Business Performance

    6. Delphi Method. The Delphi method of forecasting involves consulting experts who analyze market conditions to predict a company's performance. A facilitator reaches out to those experts with questionnaires, requesting forecasts of business performance based on their experience and knowledge.

  16. What is financial forecasting + how to do it [7 Steps]

    4. Choose a financial forecast method. There are two financial forecasting methods: Quantitative forecasting uses historical information and data to identify trends, reliable patterns, and trends. Qualitative forecasting analyzes experts' opinions and sentiments about the company and market as a whole.

  17. Financial Forecasting Guide

    The formula reads =-D42* (1-D9). I then sum forecasted sales and COGS to calculate "Gross Profit", located in cell D44. The formula reads =SUM (D42:D43). A handy shortcut for summing is ALT + =. Next, I forecast all the expenses in rows 45 to 48 as a percentage of sales. Let's first start with "Distribution Expenses," then copy the ...

  18. PDF A Practical Guide to Financial Modeling and Projections for ...

    • Developing business plans. The financial section of a business plan should provide quarterly or even monthly projections for the first year and annual projections for the four years after that. These include projected income statements, balance sheets, cash flow statements and budgets for capital expenditures. The projections are

  19. How to Write a Market Analysis for a Business Plan

    Step 2: Provide an industry outlook. An industry outlook is a general direction of where your industry is heading. Lenders want to know whether you're targeting a growing industry or declining ...

  20. Financial Assumptions and Your Business Plan

    Financial assumptions are the guidelines you give your business plan to follow. They can range from financial forecasts about costs, revenue, return on investment, and operating and startup expenses. Basically, financial assumptions serve as a forecast of what your business will do in the future.

  21. Business Plan Financial Projections

    There are three main financial statements that you will need to include in your business plan financial projections: 1. Income Statement Projection. The income statement projection is a forecast of your company's future revenues and expenses. It should include line items for each type of income and expense, as well as a total at the end.

  22. How to Write a Great Business Plan: Financial Analysis

    Most business plans include at least five basic reports or projections: Balance Sheet: Describes the company cash position including assets, liabilities, shareholders, and earnings retained to ...

  23. Financial Plan vs. Financial Forecast: What's the Difference?

    A financial plan is a strategic approach to finances that marks out a road-map to follow into the future. A financial forecast is an estimate of future outcomes arrived at using one of several ...

  24. How To Start A Business In 11 Steps (2024 Guide)

    The best way to accomplish any business or personal goal is to write out every possible step it takes to achieve the goal. Then, order those steps by what needs to happen first. Some steps may ...

  25. June 2024 Stock Market Outlook

    Full-year S&P 500 revenue growth of 5% in 2024. DataTrek Research co-founder Nicholas Colas says the 2024 stock market rally is not just about this year but about the outlook for 2025 and 2026 as ...

  26. Even high-income Americans are shopping at discount retailers as ...

    Even after years of inflation, geopolitical chaos and recession in Europe, the US economy remains resilient. The reason for that is mostly the American consumer, with spending accounting for about ...

  27. US firms grow more pessimistic on economic outlook, Fed survey shows

    U.S. economic activity continued to expand from early April through mid-May but firms grew more downbeat about the future amid weakening consumer demand while inflation continued to increase at a ...

  28. Best Small Business Insurance Of June 2024

    Updated: May 6, 2024, 9:33am. Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations. We analyzed the official ...

  29. Election 2024 Results: Continuity or change ...

    Industry leaders and economists said that while India's economy is projected to grow at 6.8 per cent in FY25, surpassing other major global economies, all eyes are on the new government that ...

  30. University of the Arts announces sudden closure

    The University of the Arts, a private nonprofit institution in Philadelphia, announced late Friday that it would close on June 7. The institution's announcement came hours after the Middle States Commission on Higher Education withdrew its accreditation, saying UArts had "failed to inform the commission of closure in a timely manner or to properly plan for closure with prior approval ...