12 month projection and business plan example

Free 1-year Financial Projection Template

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Free excel template to create financial projections for any business startup and first year. Forecast revenue, expenses, employee costs and generate an income statement, balance sheet, and cash flow pro forma automatically

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Free 1 Year Pro Forma Template

Download our 12 months financial projection template for free.  This tool will allow you to:

• Forecast startup costs
• Project your first 12 months of product or service revenue
• Forecast your operating expenses
• Add Salary Forecasts for your employees

Once you have input all of your own assumptions, you will be able to generate:

• 12 month pro forma income statement
• 12 month cash flow forecast
• 12 month balance sheet projection
• Basic graphs and charts

This free financial model is industry agnostic.  If you need an industry specific financial model you can check out ProjectionHub’s premium pro forma templates .  

Below you will be able to see some examples of the input and outputs of the projection spreadsheet. 

Financial Model Input Examples

Below you will be able to see examples of the input tabs for startup costs, fixed assets, revenue, operating expenses and salaries. 

Example of Startup Cost Forecast

The financial model input assumptions tab will include general assumptions and startup costs like your fixed assets like buildings, equipment, leasehold improvements and vehicles.  On the input assumptions tab you will also be able to include startup cost assumptions like initial inventory. 

12 Month Revenue Forecast Example

Our revenue assumptions tab will allow you to forecast your number of customers, the products or services they purchase, the purchase price and the percentage of total units sold represented by each product. You can see a quick example of our revenue model below:

Startup Operating Expense Projections Example

You can enter in your operating expense projections for your startup in the table below.  It will allow you to add expenses as a fixed monthly expense or a percentage of revenue. 

Startup Salary Forecasting Example

The last input tab is our salary forecast assumptions.  You can set a salary, employer taxes, benefits, the month the employee starts and ends, and the number of the particular employee.  

Projection Template Output Examples

Our free financial model spreadsheet will produce 12 months of income statement, cash flow and balance sheet projections.  You can see examples of each of these outputs below along with some of the basic charts and graphs that will be included. 

Example of a 12 Month Pro Forma P&L

Below you will see an example of our income statement pro forma output. 

Cash Flow Forecast 12 Month Example

Next you will see an example of our cash flow forecast output with cash from operating activities, financing and investing activities. 

Balance Sheet Forecast Example for 12 Months

The balance sheet forecast output will include 12 months of forecasted assets and liabilities as seen below:

Pro Forma Graphs

Finally, our free template includes a profit and loss at a glance, a monthly sales forecast and graph to display monthly sales, gross profit and net income.  

If you are needing a more tailored template to your industry as well as 5 years of projections, we have 100+ different industry templates to choose from as well:

Examples: Restaurant, Trucking, SaaS, Airbnb, Brewery, Dentist, etc.

Check out our Highly Rated Financial Projection Templates

12-Month Cash Flow Projection Template

Identify monthly fixed costs, estimate variable costs, calculate total monthly costs, project monthly sales revenue, subtract total costs from sales revenue to get net income, estimate any cash inflows other than sales revenue, estimate any cash outflows other than expenses, sum projected cash at beginning with net income and other cash flows, document assumptions used in the forecast, review initial 12-month cash flow projection.

• 1 Income projections
• 2 Expense projections
• 3 Cash flow calculations
• 4 Financial performance analysis
• 1 Inaccurate revenue projections
• 2 High expense estimates
• 3 Cash flow deficit
• 4 Improper financial performance

Approval: Financial Analyst

• Review initial 12-month cash flow projection Will be submitted

Adjust projections based on feedback

Final review of the adjusted projection.

• 1 Adjusted income projections
• 2 Adjusted expense projections
• 3 Updated cash flow calculations
• 4 Revised financial performance analysis
• 1 Inaccurate adjusted revenue projections
• 2 Unaccounted expenses
• 3 Cash flow imbalance
• 4 Unsatisfactory financial performance

Approval: Finance Manager

• Final review of the adjusted projection Will be submitted

Prepare a summary of the projection

Present the 12-month cash flow projection to the executive team, approval: executive team.

• Present the 12-month cash flow projection to the executive team Will be submitted

Implement the 12-month cash flow projection into monthly reporting

Take control of your workflows today., more templates like this.

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How to Create Financial Projections for your Business Plan

• Last Updated: March 27, 2023
• By: Greg Bouhl

Advertising Disclosure

Starting a business is an exciting time, but one that can come with some uncertainty. Writing out your business plan helps to increase your success significantly in addition to reducing some of the worries by getting all the ideas out of your head and organized on paper.

Financial projections are an essential component of the  business plan  to provide a realistic view as to whether or not your business is financially viable for success.

By creating financial plans, you are also able to test some of your assumptions to see the financial impact and analyze whether your business idea is feasible.

What are financial projections?

Financial projections (sometimes referred to as pro forma) are an essential part of a business plan. They are used to forecast a business’s expected sales and expenses and analyze the financial feasibility of the company. These forecasts evaluate past trends, current market conditions, and future expectations. They will also take into account regional sales potential and growth strategies and examine external and internal costs, such as the cost of customer acquisition and the amount of money you can afford to pay team members and yourself.

While it may be tempting to skip this step, not completing it could be costly.

Why are financial projections important?

Financial projections are one of the most critical steps in starting a small business. These figures help show you whether or not your business has a reasonable chance of being profitable. If your company does not reflect a profit based on your projections, you may have to make some adjustments. Financial projections can also help determine realistic price points and sales goals. They can also show you whether or not a profitable market even exists for the product or service you wish to provide.

The sales forecast is also useful in analyzing cash flows from accounts receivable and accounts payable to ensure the company has enough cash to operate.

Another reason financial projections are important is when requesting funding.  The bank will review whether you have realistic financial projections before making a business loan.

How to create financial projections?

It is important to understand that financial projections are simply the best estimates you can determine based on the information available.

These figures are next to impossible to predict accurately. While this financial forecast can’t predict how the business will perform in the future, it will provide the analysis to make informed decisions and plans for the business.

Financial projections are typically shown as a 12-month projection in the first year and by quarter in the second year and third year.

To begin with, your business plan financial projections, start by focusing on your revenue potential and likely expenses.

1. Create sales projections

Projecting sales projections (also known as revenue projections) for a new business is difficult, especially if you are new to the type of business you are starting. They are a few approaches you can consider when preparing the sales forecast.  Some companies will have multiple sources of revenue. To make these easier to follow, each revenue stream is often put on a separate line in the projections.

Average household spending  – The Consumer Expenditure Survey program from the  U.S. Bureau of Labor Statistics  (scroll down to the Annual Calendar Year Tables) provides data on the expenditures of U.S. consumers. Using the average household spending multiplied by the population in your target area, you can come up with the total potential sales. Try not to get too carried away with your target area as it will have a significant impact on potential sales.

Using the BLS data, you can look up how much people spend on food and beverages (such as food at home, food away at home, bakery products, alcoholic beverages, etc.), appliances, apparel, education, reading – and the list goes on. This information can be assessed against demographic information such as age, income, education level, occupation, race, religion, and more.

Not only can you use this data to provide useful because you can use it to gauge the feasibility of your business. For instance, if there are three competitors in your market, and you need 10% of the market to make an adequate profit, this may be a good indication your business would be successful. If you needed 80% of the market, it would likely be much more challenging.

Trade associations –  Depending on the industry you are starting your business in, it’s likely there is an industry association. Do a Google search for “[type of business] industry association” or even find a Facebook group to join and ask questions. Many industry associations have statistics and formulas you can use to estimate sales. Make sure to reference your work, so the bank or prospective investors know you didn’t come up with these numbers out of thin air. Be sure to do your own due diligence as these numbers may be overly optimistic.

Menu of services –  Another way to project sales is to create a list of services to assess how many jobs you can do in a day and the pricing of each job.

For instance, if you own a  car detailing business and it takes 4 hours per vehicle to detail, you may be able to do up to two vehicles per day, ten vehicles a week, or 40 vehicles a month (you could squeeze in a few more in a month, but let’s keep the math easy for now).

Each vehicle brings in an average of $100 for a total monthly sales revenue of $4,000. Let’s say that after subtracting rent, utilities, supplies, advertising, etc, you are left with $2,000. Now you find that best case, you have a profit of $2,000, and by working 8 hours a day, you would make $12.50 per hour. Now you have to ask yourself that in this best-case scenario where you have clients lined up each and every day and you are making $12.50 per hour, is this business worth your time?

Regardless of how you project sales, be sure to explain the key assumptions in the business plan so the reader can follow the math!

2. Project operating expenses

Next, project the monthly operating expenses of the business. Some expenses are going to be easy to estimate, such as fixed costs like rent, insurance, and utilities. Other expenses need to be carefully examined as they can make a large difference in the projected profit.

The biggest expense for most businesses is the cost of goods sold, sometimes called COGS, cost of sales, or cost of inventory. This is the cost to produce the item being sold, such as the raw materials to produce it. A typical example is a wedding band sold at a jewelry store. The sales price to the customer may have been $1,000, but the jewelry store purchased it for $700. The cost of goods sold in this instance is $700. Many times COGS is represented as a percentage, which in this example would have been 70% ($700 /$1,000).

You can often find the average cost of goods for most businesses by searching for industry publications.

Another major expense for most businesses is employees. This number can be found for many industries as a percentage of sales; however, we would recommend you create a list of the positions needed, the number of employees for each position, the number of hours worked, and wages. By comparing the industry average with your own list, you can have some confidence your numbers are in the ballpark.

Make a list of the monthly expenses and the cost for those expenses to use later in the financial statements.

3. Seasonality

After getting the sales projections completed, you will also want to look at seasonality. Seasonality refers to the fluctuations in monthly sales. Some businesses will be affected more by seasonality than others, but it is important to analyze because it may show your business will run out of cash. Lenders and potential investors will expect some seasonality, but if you have a business that has steady sales, be sure to explain why your sales are consistent.

In most areas,  landscapers  are a common business that has fluctuating sales. The spring and fall are really busy, while in the winter, there is little to no work.

4. Financial projections

With the sales projections, expenses, and seasonality now out of the way, creating the pro forma financial statements are actually pretty straightforward.

Business plan financial forecasting is typically set up to show a three-year outlook. Depending on the project, especially if it is one that has a significant amount of research and development time before revenues start to come in, some banks and lenders will occasionally want to see a five-year outlook.

There will be three financial statements to create:

• Cash flow statement –  Similar to a detailed view of a checkbook, the projected cash flow statement  looks at cash coming in and cash going out of the business. Cash flow projections usually look at the first year broken out into 12 months, and the following two years by quarter.
• Profit and loss statement  – Also referred to as an income statement, this statement is an annual estimate of the taxable profits (or losses) of the business. The numbers in the P&L statement are similar to the cash flow statement; however, depreciation and amortization are also included.
• Balance sheet –  Not every bank will request a proforma balance sheet for a start-up business. The balance sheet is similar to a personal financial statement that looks at assets and liabilities to determine the net worth.

The balance sheet is projected at the end of each year.

5. Sources and uses of funds

The sources and uses of funds section provide an overview of the financing activities, use of working capital,  loan repayments, and how the money is spent.

The sources section is a list of where the money is coming from to fund the project. This will commonly have a line for the amount of the bank loan and another line for the amount the owner is investing in the business. Keep in mind when preparing this for the bank that most banks will want to see the business owner invest 15%-25% of their own funds in a start-up business.

The uses section provides details of all the startup costs for the business. Items are usually put into categories such as:

• Real estate
• Renovations

The amount in the sources section should equal the amount in the uses section.

Financial Projection Templates

There are free financial projection templates from  Smartsheet ,  Spreadsheet 123 , and others. LivePlan has a guided approach (like Turbo Tax) to creating financial projections that are pretty thorough and easy to use.

There are free financial projection templates from  Smartsheet ,  Spreadsheet 123 , and others.  LivePlan has a guided approach (like Turbo Tax) to creating financial projections that are pretty thorough and easy to use.

With over two decades as an entrepreneur, educator, and business advisor, Greg Bouhl has worked with over 2,000 entrepreneurs to help them start and grow their businesses. Fed up with clients finding and acting on inaccurate and outdated information online, Greg launched StartUp101.com to be a trusted resource for people starting a business.

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• Business Planning

Business Plan Financial Projections

Written by Dave Lavinsky

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.

Sales | Templates

9 Free Sales Forecast Template Options for Small Business

Published March 7, 2023

Published Mar 7, 2023

REVIEWED BY: Jess Pingrey

WRITTEN BY: Jillian Ilao

This article is part of a larger series on Sales Management .

• 1 Simple Sales Forecast Template
• 2 Long-term Sales Forecast Template
• 3 Budget Sales Forecast Template
• 4 Month-to-month Sales Forecast Template
• 5 Individual Product Sales Forecast Template
• 6 Multi-product Sales Forecast Template
• 7 Retail Sales Forecast Template
• 8 Subscription-based Sales Forecast Template
• 9 B2B Lead Sales Forecast Template
• 10 CRMs with Built-in Sales Forecasting
• 11 Frequently Asked Questions (FAQ)
• 12 Bottom Line

Using a sales forecast, business owners can create realistic projections about incoming revenue and business performance based on their current data and how they have performed in the past. Sales forecasts may cover weekly, monthly, annual, and multi-annual projections, and can be done using Google Sheets or Excel templates, as well as through customer relationship management (CRM) software.

We’ve compiled nine free sales projection templates you can download. Each downloadable file contains an example forecast you can use as a reference. We also included a blank template you can copy and fill in with your own sales data.

Did you know? Sales forecasts create projections you can use for things like goal setting, performance measurement, budgeting, projecting growth, obtaining financing, and attracting investors. This is why it is important to use software tools or a CRM system that gives you realistic, data-driven forecasts.

1. Simple Sales Forecast Template

Our free simple sales forecast template will help you get started with sales estimates to plan and grow your business. You can modify this multi-year projection sheet in either Google Sheets or Excel. It can also generate future revenue estimates based on units sold, pipeline growth percentages, lead conversion rates, and your product pricing. This gives you an idea of how much your business can grow sales-wise in the next few years.

Sales projection template for multiple years

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FREE Sales Forecasting Template - One-Year

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FREE Sales Forecasting Template - Multi-Year

2. Long-term Sales Projection Forecast

Part of creating a sales plan is forecasting long-term revenue goals and sales projections, then laying out the strategies and tactics you’ll use to hit your performance goals. Long-term sales projection templates usually provide three- to five-year projections. These templates are accessible in both Excel and Google Sheets.

Long-term sales prediction templates are best for businesses looking to scale and want insights about how much working capital they can expect to be able to tap into for growth initiatives. This type of sales projection template is also often required when applying for commercial loans or through other channels such as outside investors or crowdfunding.

Three-year forecast template

Projection of units sold and gross profit from a three-year forecast template

Three-year projection of units sold

FREE 3-Year Forecast Template

FREE 5-Year Forecast Template

3. Budget Sales Projection Template

A budget sales forecast template shows expense estimates in relation to revenue, allowing you to calculate how much you can spend during a specified period. Budget templates will enable you to enter income projections and available cash to indicate your spending capabilities for that time frame.

This type of template is best for new and growing businesses trying to figure out their future available expenditures. Additionally, businesses interested in making a large asset purchase, such as a company vehicle, piece of equipment, or commercial real estate, can use this template to see how much of the asset can be self-financed.

Budget forecast template example

Budget forecast template for services example

FREE Budget Sales Forecast Template

4. Month-to-Month Sales Forecast Template

The month-to-month (or monthly) sales projection template shows sales projections for a year divided into monthly increments. This type of revenue forecast template makes it easier to estimate your incoming revenue. This is because you can break down your pricing model, such as the average number of units sold, on a monthly rather than an annual basis.

This monthly sales projection example is best for seasonal businesses that experience significant revenue fluctuations in some months compared to others. It’s also appropriate for businesses that want to view rolling 12-month projections as a key performance indicator (KPI). You can also use it to project one-year sales estimates before implementing major campaigns or initiatives, such as a growth strategy.

Month-to-month forecast template example

FREE Month-to-Month Forecast Template

5. Individual Product Sales Forecast Template

An individual product sales projection template can be used by businesses that sell one product or service or for projecting sales of a new (or any single) product or service. This forecast indicates how you expect the product to perform based on units sold and the price per unit monthly.

An individual product forecast template benefits businesses that sell products through a storefront or ecommerce medium. It helps businesses that are adding a new product to their arsenal in estimating sales exclusively for that product. It is also recommended for companies that need to track individual performance for the most popular or profitable products.

Individual product forecast template example

FREE Individual Product Forecast Template

6. Multi-product Sales Forecast Template

Use this revenue projection template to generate sales projections if your business sells multiple products. Through this type of template, you can compare the estimated performance of specific products by tracking the units sold and the price per unit. In turn, this will yield a total sales revenue estimate.

The multi-product forecasting template is best for retail or wholesale businesses selling various products. You can also use it to project the revenue of multiple product categories. Here, each “item” represents a category rather than an individual product, and the price per unit is calculated in aggregate.

Multi-product sales forecast template example

FREE Multi-product Forecast Template

7. Retail Sales Forecast Template

A retail sales projection template forecasts revenue for brick-and-mortar stores since it includes data related to foot traffic. The retail sales template calculates projected revenue by year based on foot traffic, the percentage of foot traffic that enters the store, and the scale of conversions or those who make a purchase. Since it has a field for “other revenue,” it can be used by retail stores selling online.

This business forecast template is mostly designed for brick-and-mortar retail businesses. However, a combination of ecommerce and brick-and-mortar businesses, as well as ecommerce operations, can also use this forecast template. The estimated customers passing store data fields can be replaced with website traffic to convert this sales forecast Excel sheet into an ecommerce sales forecasting template.

Retail forecast template example

FREE Retail Forecast Template

8. Subscription-based Sales Forecasting Template

Businesses relying on recurring revenue from sign-ups or contract renewals should use the subscription-based sales prediction spreadsheet. Enter data into the visitor and sign-up fields to show the visitor-to-sign-up conversion rate. Then, enter the number of new customers to show the percentage of sign-ups that convert to paying customers.

This business projection template also helps you track customer churn. It calculates your churn and retention rate based on the number of paying customers at the end of the period compared to the number at the beginning, plus the number of new customers added. Knowing your churn rate is essential since a high or increasing rate of customer turnover could indicate problems with your organization or its products or services.

How to Calculate Churn Rate:

To manually calculate churn rate, divide the number of lost customers by the total customers at the start of the time period, then multiply the result by 100. For example, if your business had 200 customers at the beginning of January and lost 12 customers by the end, you would divide 12 by 200. The answer is 0.06. Then, multiply that by 100, giving you a 6% monthly churn rate.

Churn Rate Calculator

Manual calculation of monthly customer churn rate

The fields of this template can be altered for use by contract renewal businesses like insurance agencies, information technology (IT) companies, and payroll processors. For example, subscribers can be replaced with “leads,” and new subscribers can be replaced with “presentations,” “free trials,” or “demos.” Then, change the churn rate to “non-renewed contracts” to estimate new and recurring business revenue year-to-year.

Subscription-based forecast template example

FREE Subscription-based Forecast Template

9. B2B Lead Sales Forecast Template

A business-to-business (B2B) lead forecast template estimates sales revenue from current deal opportunities in the sales pipeline through business leads. Businesses can use estimated deal values and the percent chance of closing those deals to obtain a sales projection.

This revenue projection template is best for B2B organizations, aka businesses selling to other businesses or organizations, rather than business-to-consumer (B2C) organizations. It can also be used for direct sales prospecting activities and for businesses that submit business proposals in response to solicitation requests.

FREE B2B Lead Forecast Template

CRMs With Built-in Sales Forecasting Features

Sales forecast sample templates are easy to modify. However, customer relationship management (CRM) systems generally offer more robust tools for managing revenue opportunities that can be converted into sales forecasts. They are valuable tools for providing sales predictions on premade charts through the data collected in the system. Below are examples of CRM platforms that could double as great sales forecasting software :

• HubSpot CRM

HubSpot CRM can instantly create revenue projections or automatically produce these reports for you monthly or quarterly at no additional cost, saving you time and helping your business stay on track.

Users can easily generate sales prediction reports on HubSpot with their historical data. (Source: HubSpot )

Starting price: Free for unlimited users or $45 per month (annual billing) for two users

Visit HubSpot

Pipedrive can take information such as potential deal value and probability of closing for a lead or opportunity to provide sales estimates in highly customizable templates.

Pipedrive weighted deal forecasting (Source: Pipedrive )

Starting price: $14.90 per user, per month (annual billing)

Visit Pipedrive

Zoho CRM provides sales forecasting through its native integration with Zoho Analytics, which analyzes and visualizes the data. Users can customize their forecasts by viewing them on different visual channels, including line, bar, and scatter charts.

Zoho Analytics sales prediction (Source: Zoho )

Starting price: Free for three users or $14 per user, per month (annual billing)

Providing the right tools for your sales team to organize leads, communicate with prospects, and analyze sales data is crucial for streamlining a sales operation, one of many responsibilities of a sales manager. Other insights for managing your sales team can be found in our ultimate guide to sales management .

Visit Zoho CRM

Frequently Asked Questions (FAQ)

Why is sales forecasting essential.

Sales forecasting provides a clear picture of your anticipated sales performance based on the number of opportunities in your pipeline and the industry that your business operates in. Having visibility will help you plan your business correctly—especially when the forecast is downward, and you need to scout for new opportunities to meet your sales targets.

What is a sales forecast template?

A sales forecast template is a predesigned spreadsheet that allows businesses to project their future sales revenue for a specific period. It is typically based on historical sales data figures and market trends. It also includes various factors that may potentially affect future sales performance, such as new product launches, seasonality, economic conditions, and changes in consumer behavior.

Bottom Line

Business forecast spreadsheets are available in both Excel and Google Sheets templates as well as other premade templates you can download, customize, and use. You may also take advantage of CRM features that organize, estimate, and visualize your company’s sales information, including sales predictions.

A CRM can save sales reps time in making projections as well as optimize your sales pipeline to generate leads and close more deals. We highly recommend CRMs such as HubSpot CRM , Pipedrive , and Zoho CRM , which all provide excellent sales forecasting features on top of robust sales management and lead nurturing tools.

About the Author

Jillian Ilao

Jill is a sales and customer service expert at Fit Small Business. Prior to joining the company, she has worked and produced marketing content for various small businesses and entrepreneurs from different markets, including Australia, the United Kingdom, the United States, and Singapore. She has extensive writing experience and has covered topics on business, lifestyle, finance, education, and technology.

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• Cash Flow Projection – The Comple...

Cash Flow Projection – The Complete Guide

Table of Content

Key takeaways.

• Cash flow projection is a vital tool for financial decision-making, providing a clear view of future cash movements.
• Cash flow is crucial for business survival and includes managing cash effectively and providing a financial planning roadmap.
• Automation in cash flow management is a game-changer. It enhances accuracy, efficiency, and scalability in projecting cash flows, helping businesses avoid common pitfalls.

Introduction

Cash flow is the lifeblood of any business. Yet, many companies constantly face the looming threat of cash shortages, often leading to their downfall. Despite its paramount importance, cash flow management can be overwhelming, leaving businesses uncertain about their financial stability.

But fear not, there’s a straightforward solution to this common problem – cash flow projection. By mastering the art of cash flow projection, you can gain better control over your finances and steer your business away from potential financial crises. Cash flow projections offer a proactive approach to managing cash flow, enabling you to anticipate challenges and make informed decisions to safeguard the future of your business.

If you’re unsure how to accurately perform cash flow projections or if you’re new to the concept altogether, this article will explain everything you need to know about cash flow projections – to help you confidently navigate the financial landscape of your business.

What Is Cash Flow?

To grasp the concept of cash flow projections, we must first understand the essence of cash flow itself. Cash flow is all about the movement of money flowing in and out of business. It reflects the company’s financial health and liquidity, capturing the inflows and outflows of cash over a specific timeframe.

To truly grasp your business’s financial landscape, you must understand the stages of cash flow: operating, investing, and financing activities, and how to analyze and make sense of it.

Read more to uncover a step-by-step guide on how to perform a cash flow analysis (template + examples) and methods to assess key items in cash flow statements.

What Is Cash Flow Projection?

Cash flow projection is the process of estimating and predicting future cash inflows and outflows within a defined period—usually monthly, quarterly, or annually.

Think of cash flow projection (also referred to as a cash flow forecast) as a financial crystal ball that allows you to peek into the future of your business’s cash movements. It involves mapping out the expected cash inflows (receivables) from sales, investments, and financing activities and the anticipated cash outflows (payables) for expenses, investments, and debt repayments.

It provides invaluable foresight into your business’s anticipated cash position, helping you plan for potential shortfalls, identify surplus funds, and make informed financial decisions.

Why Are Cash Flow Projections Important for Your Business?

Managing cash flow is a critical aspect of running a successful business. It can be the determining factor between flourishing and filing for Chapter 11 (aka bankruptcy ).

In fact, studies reveal that 30% of business failures stem from running out of money. To avoid such a fate, by understanding and predicting the inflow and outflow of cash, businesses can make informed decisions, plan effectively, and steer clear of potential financial disasters.

Cash Flow Projection vs. Cash Flow Forecast

Having control over your cash flow is the key to a successful business. By understanding the differences between cash flow statements and projections, small business owners can use these tools more effectively to manage their finances and plan for the future. 

Discover the power of HighRadius cash flow forecasting software ,designed to precisely capture and analyze diverse scenarios , seamlessly integrating them into your cash forecasts. By visualizing the impact of these scenarios on your cash flows in real time, you gain a comprehensive understanding of potential outcomes and can proactively respond to changing circumstances.

Here’s how AI takes variance analysis to the next level and helps you generate accurate cash flow forecasts with low variance. It automates the collection of data on past cash flows, including bank statements, accounts receivable, accounts payable, and other financial transactions, and integrates with most financial systems. This data is analyzed to detect patterns and trends that can be used to anticipate future cash flows. Based on this historical analysis and regression analysis of complex cash flow categories such as A/R and A/P, AI selects an algorithm that can provide an accurate cash forecast.

Step-by-Step Guide to Creating a Cash Flow Projection

Step 1: choose the type of projection model.

• Determine the appropriate projection model based on your business needs and planning horizon.
• Consider the following factors when choosing a projection model:
• Short-term Projections: Covering a period of 3-12 months, these projections are suitable for immediate planning and monitoring.
• Long-term Projections: Extending beyond 12 months, these projections provide insights for strategic decision-making and future planning.
• Combination Approach: Use a combination of short-term and long-term projections to address both immediate and long-range goals.

Step 2: Gather historical data and sales information

• Want to determine where you’re going? Take a look at where you’ve already been. Collect relevant historical financial data, including cash inflows and outflows from previous periods.
• Analyze sales information, considering seasonality, customer payment patterns, and market trends.

Pro Tip: Finance teams often utilize accounting software to ingest a range of historical and transactional data. Read on to discover the business use cases of implementing a treasury management solution for optimal cash flow management .

Step 3: Project cash inflows

• Estimate cash inflows based on sales forecasts, considering factors such as payment terms and collection periods.
• Utilize historical data and market insights to refine your projections.

Step 4: Estimate cash outflows

• Identify and categorize various cash outflows components, such as operating expenses, loan repayments, supplier payments, and taxes.
• Use historical data and expense forecasts to estimate the timing and amount of cash outflows.

Pro Tip: By referencing the cash flow statement, you can identify the sources of cash inflows and outflows. Learn more about analyzing projected cash flow statement .

Step 5: Calculate opening and closing balances

• Calculate the opening balance for each period, which represents the cash available at the beginning of the period.
• Opening Balance = Previous Closing Balance
• Calculate the closing balance by considering the opening balance, cash inflows, and cash outflows for the period.
• Closing Balance = Opening Balance + Cash Inflows – Cash Outflows

Step 6: Account for timing and payment terms

• Consider the timing of cash inflows and outflows to create a realistic cash flow timeline.
• Account for payment terms with customers and suppliers to align projections with cash movements.

Step 7: Calculate net cash flow

• Calculate the net cash flow for each period, which represents the difference between cash inflows and cash outflows.
• Net Cash Flow = Cash Inflows – Cash Outflows

Pro Tip: Calculating the net cash flow for each period is vital for your business as it gives you a clear picture of your future cash position. Think of it as your future cash flow calculation.

Step 8: Build contingency plans

• Incorporate contingency plans to mitigate unexpected events impacting cash flow, such as economic downturns or late payments.
• Create buffers in your projections to handle unforeseen circumstances.

Step 9: Implement rolling forecasts

• Embrace a rolling forecast approach, where you regularly update and refine your cash flow projections based on actual performance and changing circumstances.
• Rolling forecasts provide a dynamic view of your cash flow, allowing for adjustments and increased accuracy.

Cash Flow Projection Example

Let’s take a sneak peek into the cash flow projection of Pizza Planet, a hypothetical firm. In March, they begin with an opening balance of $50,000. This snapshot will show us how their finances evolved during the next 4 months.

Here are 5 key takeaways from the above cash flow projection analysis for Pizza Planet:

Upsurge in Cash Flow from Receivables Collection (April):

• Successful efforts in collecting outstanding customer payments result in a significant increase in cash flow.
• Indicates effective accounts receivable management and timely collection processes.

Buffer Cash Addition (May and June):

• The company proactively adds buffer cash to prepare for potential financial disruptions.
• Demonstrates a prudent approach to financial planning and readiness for unexpected challenges.

Spike in Cash Outflow from Loan Payment (May):

• A noticeable cash outflow increase is attributed to the repayment of borrowed funds.
• Suggests a commitment to honoring loan obligations and maintaining a healthy financial standing.

Manageable Negative Net Cash Flow (May and June):

• A negative net cash flow during these months is offset by positive net cash flow in other months.
• Indicates the ability to handle short-term cash fluctuations and maintain overall financial stability.

Consistent Closing Balance Growth:

• The closing balance exhibits a consistent and upward trend over the projection period.
• Reflects effective cash flow management, where inflows cover outflows and support the growth of the closing cash position.

How to Calculate Projected Cash Flow?

To calculate projected cash flow, start by estimating incoming cash from sources like sales, investments, and financing. Then, deduct anticipated cash outflows such as operating expenses, loan payments, taxes, and capital expenditures. The resulting net cash flow clearly shows how much cash the business expects to generate or use within the forecasted period. 

Calculating projected cash flow is a crucial process for businesses to anticipate their future financial health and make informed decisions. This process involves forecasting expected cash inflows and outflows over a specific period using historical data, sales forecasts, expense projections, and other relevant information. Regularly updating and reviewing projected cash flow helps businesses identify potential cash shortages or surpluses, allowing for proactive cash management strategies and financial planning. 

Benjamin Franklin once said, ‘Beware of little expenses; a small leak will sink a great ship.’ This underscores the importance of managing and understanding cash flow in business. 

Download this cash flow calculator to effortlessly track your company’s operating cash flow, net cash flow (in/out), projected cash flow, and closing balance.

6 Common Pitfalls to Avoid When Creating Cash Flow Projections

At HighRadius, we recently turned our research engine toward cash flow forecasting to shed light on the sources of projection failures. One of our significant findings was that most companies opt for unrealistic projections models that don’t mirror the actual workings of your finance force.

Cash flow projections are only as strong as the numbers behind them. No one can be completely certain months in advance if literal or figurative storm clouds are waiting for them on the horizon. Defining a realistic cash flow projection for your company is crucial to achieving more accurate results. Don’t let optimism cloud your key assumptions. Stick to the most likely numbers for your projections.

A 5% variance is acceptable, but exceeding this threshold warrants a closer look at your key assumptions. Identify any logical flaws that may compromise accuracy. Take note of these pitfall insights we’ve gathered from finance executives who have shared their experiences:

• Avoid overly generous sales forecasts that can undermine projection accuracy.
• Maintain a realistic approach to sales projections to ensure reliable cash flow projections.
• Reflect the payment behavior of your customers accurately in projections, especially if they tend to pay on the last possible day despite a 30-day payment schedule.
• Adjust the projection cycle to align with the actual payment patterns.
• Factor in annual and quarterly bills on the payables side of your projections.
• Consider potential changes in tax rates if your business is expected to reach a new tax level.
• Account for seasonal fluctuations and cyclical trends specific to your industry.
• Analyze historical data to identify patterns and adjust projections accordingly to reflect these variations.
• Incorporate contingencies in your projections to prepare for unforeseen circumstances such as economic downturns, natural disasters, or changes in market conditions.
• Build buffers to mitigate the impact of unexpected events on your cash flow.

• Failing to create multiple scenarios can leave you unprepared for different business outcomes.
• Develop projections for best-case, worst-case, and moderate scenarios to assess the impact of various circumstances on cash flow.

By addressing these pitfalls and adopting best practices shared by finance executives, you can create more reliable and effective cash flow projections for your business. Stay proactive and keep your projections aligned with the realities of your industry and market conditions.

How Automation Helps in Projecting Cash Flow?

Building a cash flow projection chart is just the first step; the real power lies in the insights it can provide. Cash flow projection is crucial, but let’s face it – the traditional process is resource-consuming and hampers productivity. Finance teams have no choice but to abandon it and let it gather dust for the remainder of a month.

However, there’s a solution: a cash flow projection automation tool. 

Professionals in Controlling or Treasury understand this need for automation, but it requires an investment of time and money. Building a compelling business case is straightforward, especially for companies prioritizing cash reporting, forecasting, and leveraging the output for day-to-day cash management and investment planning.

Consider the following 3 business use cases shared by finance executives, highlighting the benefits that outweigh the initial investment:

Scalability and adaptability:

Forecasting cash flow in spreadsheets is manageable in the early stages, but as your business grows, it becomes challenging and resource-intensive. Manual cash flow management struggles to keep up with the increasing transactions and customer portfolios.

Many businesses rely on one-off solutions that only temporarily patch up cash flow processes without considering the implications for the future. Your business needs an automation tool that can effortlessly scale with your business, accommodating evolving needs.

Moreover, such dependable partners often offer customization options, allowing you to tailor the cash flow projections to your specific business requirements and adapt to changing market dynamics.

Time savings:

Consider a simple example of the time and effort involved in compiling a 13-week cash flow projection for stakeholders every week. The process typically includes

• Capture cash flow data from banking and accounting platforms and classify transactions.
• Create short-term forecasts using payables and receivables data.
• Model budget and other business plans for medium-term forecasts.
• Collect data from various business units, subsidiaries, and inventory levels.
• Consolidate the data into a single cash flow projection.
• Perform variance and sensitivity analysis.
• Compile reporting with commentary.

This process alone can consume many hours each week. Let’s assume it takes six hours for a single resource and another six hours for other contributors, totaling 12 hours per week or 624 hours per year. Whether you are an enterprise or an SMB, learn how a 13-week cash flow projection template can help you keep your business on track and achieve your financial goals.

Imagine the added time spent on data conversations, information requests, and follow-ups. Cash reporting can quickly become an ongoing, never-ending process.

By implementing a cash flow projection automation tool, you can say goodbye to tedious manual tasks such as logging in, downloading data, manipulating spreadsheets, and compiling reports. Automating these processes saves your team countless hours, allowing them to focus on strategic initiatives and high-value activities.

Accuracy and efficiency:

When it comes to cash flow monitoring and projection, accuracy is paramount for effective risk management. However, manual data handling introduces the risk of human error, which can have significant financial implications for businesses. These challenges may include:

• Inaccurate financial decision-making
• Cash flow uncertainty
• Increased financial risks
• Impaired stakeholder confidence
• Wasted resources and time
• Compliance and reporting challenges
• Inconsistent data processing

Automating cash flow projections mitigates these risks by ensuring accurate and reliable results. An automation tool’s consistent data processing, real-time integration, error detection, and data validation capabilities instill greater accuracy, reliability, and confidence in the projected cash flow figures.

For example, Harris, a leading national mechanical contractor, transformed their cash flow management by adopting an automation tool. They achieved up to 85% accuracy across forecasts for 900+ projects and gained multiple 360-view projection horizons, from 1-Day to 6-Months, updated daily. This improvement in accuracy allowed the team to focus on higher-value tasks, driving better outcomes.

Cash Flow Projections with HighRadius

Managing cash flow projections today requires a host of tools to track data, usage, and historic revenue trends as seen above. Teams rely on spreadsheets, data warehouses, business intelligence tools, and analysts to compile and report the data.

HighRadius has consistently provided its customers with powerful AI and forecasting tools to support real-time visibility, historical tracking, and predictive insights so your teams can reap the benefits of automated cash flow management.

When your forecast is off, you can miss opportunities to invest in growth or undermine your credibility and investor confidence. An accurate forecast means predictable growth and increased shareholder confidence. 

Cash Flow Projection FAQs

1) how do you prepare a projected cash flow statement.

Steps to prepare a projected cash flow statement :

• Analyze historical cash flows.
• Estimate future sales and collections from customers.
• Forecast expected payments to suppliers and vendors.
• Consider changes in operating, investing, and financing activities.
• Compile all these estimates into a projected cash flow statement for the desired period.

2) What is projected cash flow budget?

A projected cash flow budget is a financial statement that estimates the amount of cash your business is expected to receive and pay out over a specific time period. This information can be helpful in determining whether your business has enough cash flow to maintain its regular operations during the given period. It can also provide valuable insight into how to allocate your budget effectively.

3) What is a 3-year projected cash flow statement?

A 3-year projected cash flow statement forecasts cash inflows and outflows for the next three years. It helps businesses assess their expected cash position and plan for future financial needs and opportunities.

4) What is projected cash flow and fund flow statement?

Projected cash flow statement forecasts cash inflows and outflows over a period, aiding in budgeting and planning. Fund flow statement tracks the movement of funds between sources and uses, analyzing financial position. Both provide insights into a company’s liquidity and financial health.

5) What are the 4 key uses for a cash flow forecast?

• Evaluate cash availability for operational expenses and investments.
• Identify potential cash flow gaps or surpluses.
• Support financial planning, budgeting, and decision-making.
• Assist in securing financing or negotiating favorable terms with stakeholders.

6) What is the cash flow projection ratio?

The term cash flow projection ratio is not a commonly used financial ratio. However, various ratios like operating cash flow ratio, cash flow margin, and cash flow coverage ratio are used to assess a company’s cash flow generation and management capabilities.

7) What is the formula for projected cash flow?

The projected cash flow formula is Projected Cash Flow = Projected Cash Inflows – Projected Cash Outflows . It calculates the anticipated net cash flow by subtracting projected expenses from projected revenues, considering all sources of inflows and outflows.

8) What are the advantages of cash flow projection?

Cash flow projection helps businesses:

• Anticipate future financial needs
• Manage cash shortages effectively
• Make informed decisions
• Ensure stability and growth
• Provide a roadmap for financial planning
• Stay proactive in managing finances

Related Resources

A Complete Guide on Fluctuation (Flux) Analysis in Accounting

Understanding Cash Flow Forecasting Methods: Short Term Vs. Long Term

Why Cash Flow Is King: Importance & How to Improve It

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Financial Forecasting Template for Startups

To begin effective and accurate financial planning for startups , you will need three key reports: a Balance Sheet, a Cash Flow Statement, and a Profit and Loss Statement (sometimes called an Income Statement). From these, you will be able to put together the five main components of your financial projection and use them effectively within your business plan.

They are one of the most important elements of any business plan, so it’s important to get them right. Whether you plan to use them to help you win over investors, obtain bank loans, or produce a long-term growth strategy for your business, financial forecasts can help your business in a number of ways.

Creating financial projections for startups

This post continues on with our topic of creating an effective business plan. Here, we focus on the fact that financial projections are not only essential to a new startup’s business plan. We emphasise that they are also essential to you as a business owner. Financial projections are able to help you gain a solid grasp of your company’s financial health.

As a rule of thumb, your financial projection should be 5 years long, with monthly figures shown for at least the first 12 months. In some cases, you may only be asked for a 12-month projection or a 3-year plan. But you can beat both of these expectations – and there are good reasons to do so.

When looking at the above image of a Profit and Loss Statement, it showcases that 5 years is long enough to plan what the business will look like when it has matured, something most startups don’t think about.

Why a 5-year projection?

“But,” I hear you ask, “how can I plan anything accurately over 5 years? I haven’t even started my business yet!”

The answer is – you don’t need to plan accurately that far ahead. Planning accurately more than a few months into the future is impossible. But plans do not need to be 100% accurate – they need to be well informed and grounded in reasonable expectations and research. Any long term plan you make will turn out differently in reality. But right now, making that plan is the only way you can gain insight into what might happen in the future.

A 5-year financial projection gives the business enough time to demonstrate what it will be like after its startup period – when it is fully established and running optimally. 5 years also gives you the potential to look to the future of the business – how it will expand its horizons after getting up and running.

The organisational principles we’ll cover are applicable whether you’re planning in Brixx or creating your own projection from scratch. While Brixx simplifies things for you by completing all of the calculations for your reports and makes it easy to restructure and test your plan, it is entirely your choice whether to use specialised software or spreadsheet for your startup’s financial projections.

What is the aim of using a financial forecast template?

What are we going to get out of it and actually present in our startup business plan? Here’s a quick list.

Three detailed financial reports:

• Cash Flow Forecast
• Profit & Loss Forecast 
• Balance Sheet Forecast 

And some quick takeaway information:

• General Assumptions
• Sales Forecasting
• Startup Costs
• Running Costs
• Salaries & Contracts
• Funding Requirements

The three financial reports form the backbone of your financial projection, while the quick takeaway information is an easily digestible way of displaying this information.

Now, the three reports I mentioned above may sound intimidating – and the truth is they use language and concepts which can take a little while to pick up! While they seem a bit alien at first, what’s important to understand is that each report is just a different way of viewing what’s going on financially in your business. Each report is made of the data you have gathered, just arranged in a standardised way. With these reports, you can create a comprehensive financial projection that will elevate your business plan or even an investor pitch.

Keep in mind

It is also worth noting that you should be able to test your financial projections. Why? Well, for a start, that’s what a lot of investors will be asking you for! What happens if sales are lower, or a project doesn’t reach completion on time? What happens if a vehicle breaks down and needs repairs or replacement? Can the business handle this – and what are the knock-on effects? All of these questions and more are easy to answer if every element of your financial plan is a modular component that you can add, change or remove without affecting the validity of the projection’s calculations.

It is crucial to keep record of your projections, documents, etc. Depending on your business plan’s audience, you may need to include items that support your statements and/or figures in the plan. These might include important staff member CVs and detailed market/competitor research data, etc. Some information will go in the appendix section, allowing you to expand on the information you’ve supplied throughout.

Understanding cash flow in your startup’s financial projection reports

The cash that comes into the business, and the cash that goes out of the business. The Cash Flow shows when cash (digital or physical) actually changes hands in these transactions. To me, cash flow is the simplest report to understand, as it shows what is the case at any given time.

Before we move into the next section, you’re going to need a spreadsheet or a piece of software like Brixx to build your Cash Flow Forecast. If you don’t fancy trying Brixx then we also have a free cash flow template which you can build it in too.

The Cash Flow Report in your financial projections

The Cash Flow Report takes into account when cash actually changes hands. The Profit & Loss Statement accounts for when the transaction agreement takes place. Let’s say you deliver a product/service immediately to your customer and they then pay you a month later. An electrician, for example, might complete some work, and then send an invoice for payment. The electrician’s charge for their work appears on their business’ Profit and Loss Report when they send the invoice, but the cash payment only appears on their business’ Cash Flow Report when they actually get paid by their customers.

This delay between the sale happening and the cash being received is part of what makes the Cash Flow Report so useful. Many businesses, even large and established ones, can suffer from a lack of ready cash. If this business can’t pay its bills this will ultimately lead to the failure of the business. Making a cash flow forecast is a means of looking ahead and trying to foresee and mitigate these problems before they happen. This can be done by identifying the periods and time and areas of the business that are a cause for concern, cash-wise.

Key questions the cash flow can answer:

• How much cash in hand the business has every month
• The consequences of projects, payments or purchases happening at unexpected times
• The toll each type of cash flow has on net cash
• Will the business stay afloat!?

Key cash flow information:

The cash flow is made up of several ‘cash flows’ – each representing different kinds of business activity, as well as ‘bottom line’ totals of these cash flows.

Understanding your Cash Flow Report

Cash flows from operating activities.

The day-to-day operations of the business: income from sales, minus the cost of sales, minus overheads like rent, electricity, paying interest and salaries.

Cash Flows from Investing Activities

The purchase and sale of assets, investments and income gained from interest on savings are recorded here. These are activities that in many cases are outside of the day-to-day running of the business. Initial asset purchases may be necessary to get the business up and running in the first place or replace existing assets that are crucial to the business but they aren’t a regular part of the business’s revenue stream or monthly bills.

Cash Flows from Financing Activities

Financing activities show where the business gets its funding from. Additionally, financing is cash received from sources external to the business, like loans or external investment. These financing cash flows also include dividends the business pays to shareholders and loan repayments to lenders.

Cash Flows from Taxation

The tax you pay and any tax refunds are included here.

Income Less Payments

This line shows the net cash movement in any given month, that is, the total of all the cash flows mentioned above. This is great for helping you identify problem periods of the year.

Closing Bank Position

The real ‘bottom line’, Closing Bank Position shows the amount of cash in your bank account/s at the end of each month. If this goes negative, the business has serious problems. This is why cash flow forecasting is so important, especially for small businesses. Splitting out these different cash flows makes this report easier to understand. It also allows each flow of cash to be compared to the others. You may find for example that you have a healthy operating cash flow but the business’ investing activities are taking too great a toll on the business’s net cash flow to continue unabated.

An overview of profit and loss in your startup’s financial projections

The P&L records the profits and losses made by the business. How do you make a loss? It’s a way of saying that something the business owns has lost value. The P&L takes into account when, or over how long transactions are agreed, rather than when cash actually changes hands.

Key questions the profit & loss can answer:

• What are the business’ Gross Profit, Operating Profit and Profit for a given period?
• Can the business afford to take on new projects?
• What non-cash losses is the business suffering?
• How are dividends related to profit?

Key information on profit and loss

Gross profit.

Gross profit is revenue from sales minus the direct costs of those sales. This is often formulated as a percentage called gross profit margin, showing the cost of selling as a % of the sale.

Operating Profit

What is Operating Profit? It is Gross Profit, minus any indirect overheads (cost of goods, services and salaries). Operating profit shows how well the business can support itself by its activities alone. Therefore it is useful gauge for whether a business can take on new projects or other costly activities.

Net profit takes into account all of the business’ extra expenditure that is not taken into account under Operating Profit. This includes investments, interest charged, interest received and taxation.

To read more about the Profit and Loss Report – check out this article: A Beginner’s Guide to the Profit and Loss Forecast Report  . If you’re still confused, here’s my attempt at busting the confusion! How to understand the Profit and Loss Statement and why it’s confusing .

Getting a handle on your financial projection’s Balance Sheet section

The Balance Sheet shows the financial position of the business at any given time. It shows what it owns (assets) balanced with what it owes (liabilities) and the money that has been invested in it (equity).

This all sounds pretty esoteric, but it boils down to “how risky is the business – how much does it own and how much does it owe?”

Key questions the balance sheet can answer:

• Value of the business’s assets
• Size of the business’s debt
• What funds the business, debt or investment?
• How risky is the business for investors?

Information on the Balance Sheet

These are what the business owns. Assets include physical things like cars and computers, and also cash and investments.

Liabilities

Liabilities are what the business owes. A business with a large ratio of liabilities to assets may be seen as risky as it funds itself with debts which must be paid off, no matter the state of the business.

Equity shows the net value of the business. It’s the same figure as net assets – the businesses’ assets minus its liabilities. Breaking down equity further, it shows who owns the business, whether this is a single owner or a group of investors.

From these three core reports, you or an accountant should be able to work out any additional information you may be asked for.

Use financial projection templates for more than just your startup’s business plan

Now that we’ve covered financial projections for your startup’s business plan, be sure to download your free Business Plan Template to help you format your plan correctly.

Remember, financial projections are useful for more than just your startup’s business plan or for seeking funding. These plans are able to help you better understand the potential risks you may face.

There are always risks when starting a new business. Your startup business plan document should be a persuasive tool to help get support for your business. However, it should also be honest. The people who look at your business plan, whether they are investors or future-you, need to have the risks and your plans for mitigating them laid out.

In most cases, these risks will be financial in nature. The business doesn’t make enough money – either because the product is not good enough, it can’t attract enough customers, or there is a misalignment between what the business is offering and what the market requires.

With a comprehensive financial projection for your startup’s business plan, you can more easily see potential risk down the line. Brixx can help you reduce the stress and time wastage of setting up spreadsheets and formulae to keep track of and project your financials.

Related articles

• SWOT Analysis For Startups
• How to Start Your Business Plan Online for Free
• A quick guide to setting up and running your business
• How to easily forecast your startup’s cash flow

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Free Sales Forecasting Templates

By Kate Eby | December 4, 2019

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In this article, you’ll find a wide range of pre-built sales forecast templates, available in Excel, Google Sheets, and PowerPoint formats. 

Included on this page, you'll find a sales forecast sample , a 12-month sales forecasting template for multiple products , a sales forecast presentation example , and many more helpful templates.

Basic Sales Forecast Sample Template

Download Basic Sales Forecast Sample Template

Excel | Google Sheets | Smartsheet

This sales forecast sample template is simple to use and provides an example of the forecasted sales of a product. Customize this template by using a forecasting technique to gather data, including historical sales information, economic trends, or comparisons within your industry. Enter the year, product, and unit type. Then, add the number of units sold and price per unit — the sales amount and percentage totals will calculate for each month with built-in formulas.

12-Month Sales Forecasting Template for Multiple Products

Download 12-Month Sales Forecasting Template for Multiple Products

Excel | Smartsheet

This sales forecasting template provides an estimate of future sales for multiple products in a yearly view, but you can customize it to project sales for any period of time. Enter the product, service, or other category name according to your needs. Then, enter your estimated monthly sales. There is also space to add historical sales, which can help you identify trends and other information that will be useful for making future projections.

3-Year Sales Forecast Template

Download 3-Year Sales Forecast Template - Excel

This customizable sales forecast template is designed to forecast sales for a 36-month time period. Enter the number of units sold, unit price, and unit cost of goods sold (CoGS). Once you’ve entered those values, built-in formulas will calculate the monthly and yearly sales growth rate, revenue, margin, and gross profit. This template also provides year-to-year comparisons to identify the years that saw the highest rate of growth.

5-Year Sales Forecast Template

Download 5-Year Sales Forecast Template

Excel | Google Sheets

This sales forecast template is user-friendly and displays the monthly and yearly sales projection for a product at a glance. Simply enter the number of units sold and price per unit for a product. Then, the total sales and percentages will auto-calculate with pre-built formulas. This template displays the highest performing month and provides insight into sales trends and fluctuations.

Monthly Sales Projection Template

Download Monthly Sales Projection Template

This monthly sales projection template is customizable and shows forecasts in a monthly and yearly view. Enter the year forecasted at the top, add total projected sales goals for new business and reorders for each month, and then add actual sales for comparison. The variance will calculate via built-in formulas, so you can measure the accuracy of new monthly sales, product reorders, and combined totals.

Daily Sales Forecast Template

Download Daily Sales Forecast Template - Excel

This daily sales forecast template enables you to estimate sales projections for a daily or weekly time frame. Use historical sales data for the same time period in previous years, and use the additional space beneath each week’s start date to add notes, including weekly sales or holidays that influenced the price per unit or total sales.

Sales and Budget Forecast Template

Download Sales and Budget Forecast Template

This customizable sales and budget forecast template is used to project monthly sales and planned expenses for a company, including advertising, insurance, payroll, and overhead. Add the estimated number of customers, average sale per customer, and average cost per sale. Then, add budgets for operating, payroll, and office expenses. Once you’ve entered those values, pre-built formulas will calculate the total sales, gross profit, total expenses, and net profit for a 12-month period.

Product Sales and Profit Forecasting Template

Download Product Sales and Profit Forecasting Template - Excel

This sales and profit forecasting template provides the projected sales, operating income, and market share for a product over a five-year span. Once you’ve entered the product data, the forecasted values will auto-calculate on the Output Scenario tab with built-in formulas. The results provide the forecasted sales and profit based on target operating income and target market share.

Sales Forecast Presentation Template

Download Sales Forecast Presentation Template - PowerPoint

This sales forecast presentation template provides visually appealing graphics that you can customize according to your needs. Add projected sales and growth percentages for any time period. Then, add charts and historical data to display trends. This presentation template also includes a slide that allows you to add key takeaways or other pertinent information to support your forecasts.

Deal-Based Sales Forecasting Template

Download Deal-Based Sales Forecasting Template

This sales forecasting template is based on the deal stage, size, and probability. Enter the company name and contact information related to each deal, select the deal stage, and add the deal size. Once you enter the stage and size, the probability and weighted forecast will auto-calculate with built-in formulas. This template also has space to assign a sales representative, select anticipated close dates, and detail necessary further actions.

Opportunity-Based Sales Forecast Template

Download Opportunity-Based Sales Forecast Template - Excel

This sales forecast template provides a weighted forecast for opportunities based on the probability of the sale. Add the opportunity name, sales phase, sales agent, region, and sales category. Then, add the forecasted amount and probability for each opportunity. Based on the  values you enter, the weighted forecast will auto-calculate with pre-built formulas and display a visual of sales projections on the Forecast Totals and Forecast Graph tabs.

Sales Forecasting by Lead Stage Template

Download Sales Forecasting by Lead Stage Template - Excel

This lead-driven forecasting template enables you to project the value of each lead on a monthly basis, based on historical data (e.g., the previous sales cycle, lead conversion rates, and average unit price). When you customize the Deal Stage key, the deal stages use formulas to automatically update accordingly. Add contact information, key dates, and the deal value for each lead. Then, the weighted forecast value will auto-calculate according to the closure probability you assign to each stage in the key.

E-Commerce Sales Forecast Template

Download E-Commerce Sales Forecast Template

This sales forecast template is designed to project future revenue for an e-commerce business over a five-year time period. Enter the marketing budget at the top of the template. Then, enter the number of organic visits, conversion rate, average order value, and other revenue. Once you enter those values, the paid and organic visits, sales, and total revenue will auto-calculate with built-in formulas.

Retail Sales Forecast Template

Download Retail Sales Forecast Template

This customizable retail sales forecasting template projects the total annual revenue for a five-year time span. Enter the estimated daily footfall, percentage of customers who enter the store and make a purchase, average sale value, and other sources of revenue. Once you enter those values, the total number of customers, sales, and revenue will calculate with pre-built formulas.

Hotel Revenue Projection Template

Download Hotel Revenue Projection Template

This sales forecasting template projects the annual revenue of a hotel over a five-year time span. Enter the total number of rooms and the number of operating days in a given year, the occupancy rate and average daily room rate, and the food and beverage percentage, if applicable. The projected room occupancy and total revenue will calculate automatically with built-in formulas.

Bed and Breakfast (B&B) Sales Forecast Template

Download Bed and Breakfast (B&B) Sales Forecast Template

This sales forecast template is designed to estimate the total revenue for a bed and breakfast (B&B) for a five-year time period. At the top, enter the number of rooms available, the number of days open by season, average room rates, and other revenue. Occupancy rates, available nights, and total projected revenue will calculate with pre-built formulas.

Why Is Sales Forecasting Important?

Performing a sales forecast , or estimating future sales, is a valuable tool you can use to predict the short and long-term performance of your company. When done accurately, a sales forecast can provide keen insight and enable your company to make informed strategic decisions that reinforce and align with your organization’s sales plan . 

Learn more about the key steps involved in performing a sales forecast, along with helpful tips and examples, by visiting " The Last Guide to Sales Forecasting You'll Ever Need: How-To Guides and Examples ."

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Original text

Access our collection of user-friendly templates for business planning, finance, sales, marketing, and management, designed to assist you in developing strategies for either launching a new business venture or expanding an existing one.

You can use the templates below as a starting point to create your startup business plan or map out how you will expand your existing business. Then meet with a  SCORE mentor to get expert business planning advice and feedback on your business plan.

If writing a full business plan seems overwhelming, start with a one-page Business Model Canvas. Developed by Founder and CEO of Strategyzer, Alexander Osterwalder, it can be used to easily document your business concept.

Download this template to fill out the nine squares focusing on the different building blocks of any business:

• Value Proposition
• Customer Segments
• Customer Relationships
• Key Activities
• Key Resources
• Key Partners
• Cost Structure
• Revenue Streams

For help completing the Business Model Canvas Template, contact a SCORE business mentor for guidance

From creating a startup budget to managing cash flow for a growing business, keeping tabs on your business’s finances is essential to success. The templates below will help you monitor and manage your business’s financial situation, create financial projections and seek financing to start or grow your business.

This interactive calculator allows you to provide inputs and see a full estimated repayment schedule to plan your capital needs and cash flow.

A 12-month profit and loss projection, also known as an income statement or statement of earnings, provides a detailed overview of your financial performance over a one-year period. This projection helps you anticipate future financial outcomes by estimating monthly income and expenses, which facilitates informed decision-making and strategic planning. 

If you’re trying to get a loan from a bank, they may ask you for a personal financial statement. You can use this free, downloadable template to document your assets, liabilities and net worth. 

A Personal Financial Statement is a

Marketing helps your business build brand awareness, attract customers and create customer loyalty. Use these templates to forecast sales, develop your marketing strategy and map out your marketing budget and plan.

How healthy is your business? Are you missing out on potential growth opportunities or ignoring areas of weakness? Do you need to hire employees to reach your goals? The following templates will help you assess the state of your business and accomplish important management tasks.

Whether you are starting your business or established and looking to grow, our Business Healthcheck Tool will provide practical information and guidance.

Learn how having a SCORE mentor can be a valuable asset for your business. A SCORE mentor can provide guidance and support in various areas of business, including finance, marketing, and strategy. They can help you navigate challenges and make important decisions based on their expertise and experience. By seeking out a SCORE mentor, you can gain the guidance and support you need to help grow your business and achieve success.

SCORE offers free business mentoring to anyone that wants to start, currently owns, or is planning to close or sell a small business. To initiate the process, input your zip code in the designated area below. Then, complete the mentoring request form on the following page, including as much information as possible about your business. This information is used to match you with a mentor in your area. After submitting the request, you will receive an email from your mentor to arrange your first mentoring session.

Copyright © 2024 SCORE Association, SCORE.org

Funded, in part, through a Cooperative Agreement with the U.S. Small Business Administration. All opinions, and/or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the SBA.

• Cashflow management

How does a 12 month cash flow forecast work?

A 12-month cash flow forecast is an important tool for optimally controlling the cash flow in a company. Here we show you how to create such a forecast and actively work with it.

12 month cash flow forecast: What is it and why is it important?

A 12-month cash flow forecast shows a company its expected liquidity situation, i.e. how high its income and expenses will be in the next 12 months. This corresponds to long-term liquidity planning and is an important planning tool for start-ups as well as for companies already firmly established in the market.

In general, a cash flow forecast has several functions:

• It shows which resources are likely to be available in the coming months so that business activities and investments can be better planned
• It gives managers more control over liquidity so that funds can be targeted where they add the most value to the business
• It can indicate impending liquidity bottlenecks at an early stage so that those responsible have more time to act and can take measures in good time to limit the negative effects of the bottleneck.
• It helps managers better understand their business, enabling them to make better strategic decisions.

How does the 12 month cash flow projection work?

The principle for the 12 month cash flow forecast is very simple: you compare the expected income with the expected expenditure for each month. If you then subtract the expenses from the income, you get an ending balance for each month that shows either a deficit or a surplus - depending on whether the expenses are higher or lower than the income. In order for the cash flow forecast to be as accurate as possible, all income and expenses must be taken into account, as well as an estimate of future customer demand, investment plans, etc. In this way, a very accurate picture of the future is drawn. In this way, a very accurate picture of the future is drawn.

• Income may include:
• Customer payments
• Income from cash sales
• Subsidies and other funding
• Tax refunds
• Income from financial investments
• Income from licences/patents

Expenditures include, but are not limited to:

• Salary payments to employees
• Rental payments for office buildings, business premises, warehouses and production halls
• Payments to suppliers for purchases of materials and goods
• Fees for software licences
• General operating costs such as electricity, heating, water, internet
• Marketing costs
• Loan repayment instalments
• Tax payments or tax arrears

12 month cash flow forecast: Example

Let us now look at an example of a cash flow forecast. The following table shows the first two months of a year of a company's cash flow. The cash flow balance at the beginning of the year is £3,000.

If you follow this pattern, you can create a 12-month cash flow forecast. As you can see from the example above, you can use past values as a guide, especially for expenses, since some payments recur regularly in the same amount (e.g. salary payments or software fees).

It quickly becomes clear from this example that the accuracy of the forecast depends on which income and expenses are taken into account. Therefore, it is important to include all items as accurately as possible. This is the only way to get a clear view of your liquidity.

Important: Update the forecast on a regular basis

Since cash flow is a very fluctuating variable, it is impossible to predict it 100% accurately for a year, because one always works with estimates. In order to keep the cash flow forecast up-to-date, it is therefore important to adjust it regularly.

If, for example, customer demand is expected to increase at the beginning of the year, but then, contrary to expectations, decreases, this must be adjusted in the forecast, as otherwise it does not present a realistic picture of the future.

It is worthwhile to plan the 12 month cash flow forecast at the beginning of each month for the coming 12 months, so that you always have a forecast for 12 months based on the current cash flow figures.

How to make a 12 month cash flow forecast: Template

To make it easier for you to create a 12-month cash flow forecast, you can download our free template here . In it, you can make changes yourself, for example, add more rows to the income and expenditure - depending on what makes sense for your business.

This 12 month cash flow forecast gives you a good overview of your expected cash flow balance in the coming months so that you can plan your activities even better. We wish you every success with it.

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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.

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.

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22 Sales Projection Templates for 2021 Forecasts

Casey O'Connor

What Is Sales Forecasting?

Types of sales forecast templates, forecasting templates for startups, forecasting templates for businesses with multiple products, forecasting templates for b2b companies.

Sales projection templates can help you quickly and easily create an accurate, data-driven sales forecast for your team.

Sales forecasting is an important exercise for any sales team that wants to see significant year-over-year growth and the ability to fine-tune their sales process in specific, targeted ways. 

In this article, we’ll go over the basics of sales forecasting, as well as provide various forecast templates to help you streamline the process. 

Here’s what we’ll cover:

• Top Forecasting Templates for Startups

A sales forecast is a data-driven prediction of the financial outcomes a business will most likely see at the end of a given time period. A sales forecast can provide insight into the performance of individual sales reps, full sales teams, or even entire organizations. 

For overworked salespeople, making financial projections about future sales that may or may not come to fruition can seem like an exercise in futility. But a thorough, carefully considered sales forecast can be a huge asset to your business .

In order to create an accurate sales forecast, consider how the following factors currently impact your bottom line:

Your business goals are a very important benchmark for your sales team to keep in mind as you create your sales forecast. While your goals may not directly factor into the actual template, they will help steer your decision-making processes. Both short-term and long-term SMART goals will help give structure to your forecast.

Sales Process

Your sales process map will be another helpful tool in creating your sales forecast (if you don’t have one yet, check out our tips on creating one here ). Use your sales process map to pull data points and determine areas of strength and growth.

Company Standards

Chances are that your sales team is made up of salespeople from all different backgrounds and experiences — what one sales rep considers a “qualified lead” may be entirely different from the next. The same goes for things like follow-up communication — how much is too much? Should the follow-up process start on LinkedIn , or via email? 

While it may feel laborious, it’s worth your time to standardize and define these kinds of terms with your team. Use your sales process map to guide this exercise. Having consistency in your metrics will go a long way in pinpointing your sales projections.

In business, every penny counts (this is particularly true for small businesses and start-ups). If you’re not tracking every single penny that goes into and out of your business ( many businesses aren’t ), you need to start ASAP. Your sales projections will only be as accurate as your accounting, and the devil here is in the details. 

Don’t worry — you don’t need to go and cut funds from every department. Sometimes knowing the numbers is just as powerful as trimming them. But you’ll only reap the benefits of sales forecasting if you take a good hard look at the dollars you’re currently spending — all of them. 

Befriend Your CRM

If your company utilizes any CRM software, now’s the time to start maximizing it. Your CRM can be a great way to track the many moving pieces that make up a sales forecast. Make sure you understand its full functionality , as many companies tend to only stick to the surface-level features.

When executed correctly, sales forecasts can give you very valuable insight into various aspects of your sales performance over a period of time. It also gives investors a really compelling reason to inject money into your business — if your forecasted sales are promising, they’ll be much more likely to invest.

Different businesses have different needs for sales forecasting templates. These templates may include things like multiple products, multiple time frames, seasonality considerations, and other variables. It’s important to make sure the template you choose captures the full financial picture without overcomplicating it. 

In general, there are seven main types of forecast templates. Some of these standardized templates may work for your business, but you should also feel free to use these as a starting point, and customize as needed

(Don’t be intimidated by this process — you can do most of this with Microsoft Excel or Google Sheets!)

1. Lead Driven Forecasting

With this lead-driven forecasting template , you’ll be relying on extensive knowledge of your leads. Each lead source gets a value assigned, and projections are calculated accordingly.

Because this template requires a lot of data about leads and their behaviors, it may not work well for businesses that are just starting out and still researching their customer base. 

2. Length of Sales Cycle Forecasting

Length of sales cycle forecasting  predicts the probability of a deal closing based on where they are in your sales cycle. It then assigns each deal a value based on how far along they are in the process. 

This template works well for companies who have robust CRM or other automation tools.

3. Opportunity Stage Forecasting

Opportunity stage forecasting is similar to the previous two templates, though it doesn’t account for source of leads or exact length of sales cycle. Instead, it assigns a probability to each prospect based on what stage of the sales process they’re in. 

This template will take these probabilities, assign them a value, and add those values into your sales projection as your leads move through the sales process. 

4. Intuitive Forecasting

Intuitive forecasting is pretty self-explanatory, and the least objective approach to sales forecasting . It relies on a sales rep’s experience to make judgments about how much  value each deal will bring to the company. 

Sales reps might consider any of the following as they make their forecast:

This method is difficult to scale, but it also doesn’t require a ton of historical sales data — it’s a good fit for many startups as they gather sales data. 

5. Test-Market Analysis Forecasting

Test-market analysis forecast templates are used when launching new products. This method requires that you perform and collect data on a small test launch, and apply those results to your overall forecast.

6. Historical Forecasting

This is a very data-driven approach — it uses your historical sales data to predict future  growth. It’s relatively quick and easy, but it has its downfalls. 

Historical forecasting  does not take any external factors into account, like market conditions or sales team changes. It simply looks at your history of sales. It also assumes year-over-year growth, which isn’t always the case. For most companies, historical sales data is a hugely beneficial piece of the sales forecast, but not the entire basis.

7. Multivariable Analysis

This multivariable analysis example spits out forecasts for gross profit and growth rate, but you could also formulate to predict things like profit margin or total revenue.

Without long-term historical sales data, it can be hard for many startups to create detailed projected sales reports. This is also true for older businesses who are launching a new product. In cases like these, it’s best to start with a simple projections template. 

Here are some of the most basic, easiest-to-use templates we found for businesses that are just starting out. Click on the template’s header to download each one. 

8. One-year Sales Forecast

One-year Sales Forecast (Google Sheets):

This template has very few inputs for historical sales data. All you need to include are the year, product, unit type, and the number of units sold. The spreadsheet has built-in formulas that will calculate the remaining rows automatically.

9. Best & Worst Case Scenario

Best & Worst Case Scenario (Excel):

This template works well for companies who have only minimal data, and can give new businesses a target forecast range rather than precise numbers. For startups, this can allow for flexibility while still pursuing aggressive growth.

10. Expense-Focused

Expense-Focused (Excel):

This template does a really nice job of breaking down all the various expenses that go into running a business. It could work really well for startups who are still learning how their cash flows in and out. 

11. Monthly Sales

Monthly Sales (Microsoft):

This template is great for startups that want to cut out the extra noise and simply determine whether their efforts are paying off month-to-month while they’re starting out.

12. Simple Monthly Reporting

Simple Monthly Reporting (PDF):

Businesses with multiple products (many e-commerce businesses fit this description, for example) sometimes struggle to create a sales forecasting template that’s fluid enough to capture the performance of many different profit streams. 

Take a look at some of the best templates we found that are flexible enough to meet those needs. 

13. 12-Month Forecast for Multiple Products

12-Month Forecast for Multiple Products (Excel):

This template is detailed enough to see how each product fits into the bigger picture, but also simple and intuitive enough that a fledgling business could use it effectively.

14. Color-Coded Outputs

Color-Coded Outputs (Excel):

This template does a really nice job of streamlining the data from multiple product sales and arranging them in an aesthetically pleasing and easy-to-read manner. 

15. Opportunity-Based

Opportunity-Based :

This template  allows you to input sales based on deal stage, size, and probability. It’s best suited for companies who have a more developed understanding of their leads and sales process.

16. New Product Launch

New Product Launch (Excel):

This template is great for companies who are launching a new product and want to look at projections for that product in isolation. Because new products sometimes take longer to get off the ground and aren’t necessarily representative of sales projections as a whole, it can be good to look at their performance removed from the bigger picture — at least in the beginning.  

17. Individual Growth Rates by Product

Individual Growth Rates by Product (Excel):

This template does the dirty work for you by breaking down growth rates by individual products, so you can pinpoint the ones that are making the biggest impact.

Here are a few examples of sales forecasting templates for B2B companies.

18. Lead-Driven B2B

Lead-Driven B2B (Excel):

This template allows salespeople to enter data following a lead-driven approach. It assigns a projected value based on what stage the lead is in.

19. Projected Volume

Projected Volume (Excel):

20. Site Traffic Projections

Site Traffic Projections (Google Sheets):

This template download has wonderful step-by-step instructions for inputting your data and analyzing the results. The template uses site traffic as one of its metrics, so it would work best for e-commerce or other heavily web-based businesses.

21. Multivariable Analysis

Multivariable Analysis (Google Sheets):

This template allows for projections based on a number of different variables, including seasonality. The template is great for businesses that have many external variables to consider. 

22. Historical Growth Rate

Historical Growth Rate (Excel):

This template uses your historical sales data to predict future growth. Because the only inputs are past sales, it’s important to make sure that this data is very robust — we recommend at least two years of historical sales figures for this template.

Hopefully, one of many of these templates will be a good fit for your sales forecasts. They can be used as a guide to creating your own custom template in Excel or Google Sheets. Make sure to include the constants — things like unit sold and cost of goods sold — but tweaking the templates can go a long way in making them a more powerful tool for your business.

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Analyzing Your 12 Month Cash Flow Projection for Business Planning

Introduction.

A 12 month cash flow projection is an invaluable tool for business planning. It helps identify potential cash shortages, and plan accordingly to mitigate the effects of low cash flow. It can be used to calculate cash flow position at any given time in the future, and is a key part of operating a successful business.

In this post, we'll discuss how to use a 12 month cash flow projection for business planning. We'll look at how to create a 12 month cash flow projection , and the benefits it can provide.

Definition of 12 Month Cash Flow Projection

A 12 month cash flow projection is a document that helps a company track and forecast its cash inflows and outflows over a 12 month period. It helps the company assess its financial health and provides an indication of its cash flow needs over the next 12 months. The projection also helps guide business decisions, such as when to make capital investments.

How to Use 12 Month Cash Flow Projection for Business Planning

• Analyze your current cash flow position.
• Identify potential cash shortages.
• Evaluate different strategies to address the projected cash flow shortage.
• Implement the chosen strategy to ensure you have enough cash to cover your business needs.

Assessing Your Income

Conducting a 12 month cash flow projection for business planning is a crucial step for entrepreneurs. It involves making insightful forecasts of income and expenses to determine your overall financial health. Assessing your income is one of the key components in predicting your operating costs, minimizing the risk of defaults, and reducing expenses.

Understanding all sources of income

Estimating your income for the upcoming year should include all current and potential sources of revenue. By understanding all potential sources of income like operating earnings from inventory sales, accounts receivable from customers, and capital gains from investments, you will be better prepared for ups and downs in your cash flow. Running projections for all sources of income helps you make more informed decisions on planning your budget and cash flow.

Short and long-term projections for income

By examining both short and long-term projections for income, you can gain a better understanding of your future cash flows. This will allow you to anticipate any seasonal income cycles, spikes in demand, or market changes that could have an impact on your business operations. Projecting a 12 month cash flow statement can also help you plan for any key milestones in the upcoming year, such as launching a new product or expanding operations.

Setting and adjusting goals for income

Given the volatility of the market, it's important to be flexible with your income goals and adjust as needed depending on the state of the industry and your target customer base. Evaluating your projections on a periodic basis can help inform your decision-making process and allow you to adjust objectives as needed. Additionally, setting realistic goals and expectations for income can help you avoid costly missteps.

• Understand all sources of income
• Analyze short and long-term projections for income
• Set and adjust goals for income

Analyzing Your Expenses

Analyzing your budget is the most critical aspect of your 12 month cash flow projection . By understanding your expenses, you can create a plan for how to spend your budget and how to budget for future years. To get the best analysis of your budget, you must first itemize your monthly expenses .

Itemize Monthly Expenses

Itemizing your monthly expenses can be a tedious task, but it is essential to creating an accurate cash flow projection. Start by jotting down every dollar that you foresee spending in the next 12 months. Consider both fixed expenses (such as rent, insurance, and utilities) and variable expenses (such as inventory, marketing campaigns, and labor). Make sure to account for seasonal expenses as well so that you can accurately calculate how your budget will look throughout the year.

Identifying Discretionary versus Non-discretionary Expenses

After itemizing your expenses, the next step is to identify which are discretionary and which are non-discretionary. Discretionary expenses are those costs that you can choose to incur or bypass, while non-discretionary expenses are costs that must be paid regardless of your budget. The distinction between the two is critical in determining how to allocate resources within your budget.

Establishing Benchmarks for Expenses

With an itemized list of expenses sorted into discretionary and non-discretionary, the next step is to establish benchmarks for each type of expense. Benchmarks enable you to decide a baseline number for each type of expense and measure performance accordingly. They also let you make adjustments to your budget if needed. You should consider industry averages and past performance to establish your benchmarks, if applicable.

By itemizing your monthly expenses, identifying what is discretionary or non-discretionary and establishing benchmarks for your expenses, you can create an accurate 12 month cash flow projection that will help you plan for your business.

4. Evaluating Current Finances

When planning your 12 month cash flow projection , it is essential to have a clear understanding of your current finances. This includes understanding your debt, assets and investments, and analyzing your portfolio performance. Let's look at each area in more detail.

a. Know What Your Current Money Situation Is

Start by getting familiar with your current financial situation. This includes noting all of your sources of income, debts, and savings. In addition to your current financial situation, identify any short term and long term goals. Everyone's financial situation is unique, so it is important to be honest and thorough. You should also review bank statements to ensure accuracy.

b. Consider Current Debt, Assets, and Investments

Next, take a look at your debt, assets and investments. From there, you should be able to determine your net worth. Knowing how much is owed, the value of physical assets, and how your investment portfolio is performing will give you a better understanding of where your finances currently stand. Some helpful tools you can use to help track these include financial calculators and apps.

c. Analyze Current Portfolio Performance

Finally, you should analyze your portfolio performance. Take the time to review your various investments, as well as their performances over time. Consider the return on investment (ROI), and also note any fees charged. Also pay close attention to the type of investments you are making. Are these helping to generate value and move you closer to achieving your goals, or are there better investments to be made.

• Scrutinize fees charged
• Review return on investment (ROI)
• Analyze variety and performance of investments

Tracking Your Cash Flow

Having a handle on your cash flow is key to successful business operations. On a regular basis, you should analyze your twelve-month cash flow projection as outlined in the previous sections, to assess whether your revenue, expenses, and timeline are in line with the milestones you set out when starting your business.

When tracking your cash flow, you should establish both a weekly and monthly tracking system to ensure accuracy in your data. Begin by examining your balance sheet and checking that income sources and related expenses match current expectations. Comparing your actual income and expenses with cash flow projections for the period can give you a good indication of where you are in relation to your set goals.

Analyze your income and expenses over the last two to three years to identify any trends in how your business is performing. Investigate and look for any discrepancies that may require closer scrutiny. Regular tracking allows you to detect any changes in income and expenses over time, such as long-term seasonal changes in sales or higher costs, which can be included in the twelve-month cash flow projection.

Finally, make any changes needed to adjust your timeline based on the data collected during tracking. Evaluate where extra funding may be needed and which areas of the business require greater capital. Once all changes have been made, you may need to recalculate revenue and expense projections for the remaining period.

Establishing a weekly and monthly tracking system

• Check balance sheet and compare with cash flow projection for period
• Analyze income and expenses from the past two to three years
• Investigate any discrepancies that require closer scrutiny

Identifying trends in income and expenses

• Look for seasonal changes in sales or difference in cost
• Include any changes in twelve-month cash flow projection

Adjusting timeline based on changes in income and expenses

• Evaluate where extra funding may be needed
• Identify areas of the business needing greater capital
• Recalculate the remaining period's revenue and expenses

Balancing Financial Goals

Analyzing the 12 month cash flow projection provides important insights into how a business’s finances should be managed. Before setting and prioritizing any financial goals, it is important to consider any mandatory commitments, such as paying taxes, ongoing operational expenses and any long-term investments that a business has already agreed upon. This will give a better understanding of the amount of cash that is available for any new financial plans that a business may want to implement.

Setting Goals for Investments and Savings

The financial goals set by a business should be strategic, realistic and achievable in order to have any meaningful effect on the current and future operations of the business. Start by identifying the main areas where investments and savings can be made, such as product development, research and marketing. Then set individual goals for each area, such as an increase in the total number of customers acquired or a reduction in the cost of goods or services.

Prioritizing Financial Goals Based on Current Assessment

Once the goals have been set, they should be assigned a priority level to ensure they are aligned with the overall goals of the business. It may be necessary to make trade-offs in order to prioritize certain financial goals over others. This can be done by examining the current cash flow projection and comparing it to any potential changes that would occur when implementing the new goals.

Implementing Strategies to Reach Those Goals

After completely assessing the financial goals, a plan of action can be created. This will include various strategies and implementation steps that need to be taken in order to reach those goals. Create a timeline of when the goals should be achieved and what milestones need to be met in order to stay on track. Finally, assess the results of the strategies that have been implemented to determine how successful they have been.

Analyzing a 12 month cash flow projection for business planning is a great tool for businesses to assess the current financial situation and to plan for a successful future. Planning for the upcoming year requires analyzing the expected cash flows and the performance of the past year. Using this information, businesses can create a budget and determine the financial goals for the upcoming year.

Summary of 12 month cash flow projection for business planning

A 12 month cash flow projection requires a business to track their cash inflows and outflows for 12 months in order to gain insights into the business’ current financial situation. This information can be used to help businesses create a budget, plan for expenses to come, and set realistic financial goals. This way businesses can better prepare for the upcoming year, plan ahead, and ensure a successful year.

The importance of monitoring and reassessing finances regularly

It is important for businesses to continuously track and monitor their finances. This will ensure that businesses are aware of their financial situation and can adjust accordingly if necessary. Regularly reassessing the cash flow projection will help to make sure that businesses are on track with their financial goals and that they can adjust their strategies if needed.

It is essential that businesses develop and maintain a financial plan that considers the current and future financial situation. Analyzing the 12 month cash flow projection for business planning is one approach to please achieve this. This allows for businesses to adjust their strategies for the upcoming year, create a realistic budget, and ensure that their financial goals are reachable and attainable.

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Sales forecasting: How to create a sales forecast template (with examples)

A strong sales team is the key to success for most companies. They say a good salesperson can sell sand at the beach, but whether you’re selling products in the Caribbean or Antarctica, it all comes down to strategy. When you’re unsure if your current strategy is working, a sales forecast can help.

What is a sales forecast?

A sales forecast predicts future sales revenue using past business data. Your sales forecast can predict a number of different things, including the number of new sales for an existing product, the new customers you’ll gain, or the memberships you’ll sell in a given time period. These forecasts are then used during project planning to determine how much you should allocate towards new products and services. 

Why is sales forecasting important?

Sales forecasting helps you keep a finger on your business’s pulse. It sets the ground rules for a variety of business operations, including your sales strategy and project planning. Once you calculate your sales projections, you can use the results to assess your business health, predict cash flow, and adjust your plans accordingly.

An effective sales forecasting plan:

Predicts demand: When you have an idea of how many units you may sell, you can get a head start on production.

Helps you make smart investments: If you have future goals of expanding your business with new locations or products, knowing when you’ll have the income to do so is important. 

Contributes to goal setting: Your sales forecast can help you set goals outside of investments as well, like outshining competitors or hiring new team members.

Guides spending: Your sales forecast may be the wake-up call you need to set a budget and use cost control to reduce expenses.

Improves the sales process: You can change your current sales process based on the sales projections you’re unhappy with.

Highlights financial problems: Your sales forecast template will open your eyes to problem areas you may not have noticed otherwise. 

Helps with resource management: Do you have the resources you need to fill orders if it’s an accurate sales forecast? Your sales forecast can guide how you allocate and manage resources to hit targets.

When you have an accurate prediction of your future sales, you can use your projections to adjust your current sales process.

Sales forecasting methods

Sales forecasting is an important part of strategic business planning because it enables sales managers and teams to predict future sales and make informed decisions. But why are there multiple sales forecasting methods? Simply put, businesses vary in size, industry, and market dynamics, so no single methodology suits all.

Choosing the right sales forecasting method is more of an art than a science. It involves:

Analyzing your business size and industry

Assessing the available data and tools

Understanding your sales cycle's complexity

A few telltale signs that you've picked the correct approach include:

Improved accuracy in sales target predictions

Enhanced understanding of market trends

Better alignment with your business goals

Opportunity stage forecasting

Opportunity stage forecasting is a dynamic approach ideal for businesses using CRM systems like Salesforce. It assesses the likelihood of sales closing based on the stages of the sales pipeline. This method is particularly beneficial for sales organizations with a clearly defined sales process.

For example, a software company might use this method to forecast sales by examining the number of prospects in each stage of their funnel, from initial contact to final negotiation.

Pipeline forecasting method

The pipeline forecasting method is similar to opportunity stage forecasting but focuses more on the volume and quality of leads at each pipeline stage. It's particularly useful for businesses that rely heavily on sales forecasting tools and dashboards for decision-making.

A real estate agency could use it by examining the number of properties listed, the stage of negotiations, and the number of closings forecasted in the pipeline.

Length of sales cycle forecasting

Small businesses often prefer the length of sales cycle forecasting. It's straightforward and involves analyzing the duration of past sales cycles to predict future ones. This method is effective for businesses with consistent sales cycle lengths.

A furniture manufacturer, for instance, might use this method by analyzing the average time taken from initial customer contact to closing a sale in the past year.

Intuitive forecasting

Intuitive forecasting relies on the expertise and intuition of sales managers and their teams. It's less about spreadsheets and more about market research and understanding customer behavior. This method is often used with other, more data-driven approaches.

A boutique fashion store, for example, might use this method, relying on the owner's deep understanding of fashion trends and customer preferences.

Historical forecasting

Historical forecasting uses past performance data to predict future sales. This method is advantageous for businesses with ample historical sales data. It's less effective for new markets or rapidly changing industries.

An established book retailer could use historical data from previous years, considering seasonal trends and past marketing campaigns, to forecast next quarter's sales.

Multivariable analysis forecasting

Multivariable analysis forecasting is a more sophisticated method that's ideal for larger sales organizations. It analyzes factors like market trends, economic conditions, and marketing efforts to provide a holistic view of potential sales outcomes.

An automotive company, for example, could analyze factors like economic conditions, competitor activity, and past sales data to forecast future car sales.

How to calculate sales forecast

Sales forecasts determine how much you expect to do in sales for a given time frame. For example, let’s say you expect to sell 100 units in Q1 of fiscal year 2024. To calculate sales forecasts, you’ll use past data to predict future trends. 

When you’re first creating a forecast, it’s important to establish benchmarks that determine how much you normally sell of any given product to how many people. Compare historical sales data against sales quotas—i.e., how much you sold vs. how much you expected to sell. This type of analysis can help you set a baseline for what you expect to achieve every week, month, quarter, and so on.

For many companies, this means establishing a formula. The exact inputs will vary based on your products or services, but generally, you can use the following:

Sales forecast = Number of products you expect to sell x The value of each product

For example, if you sell SaaS products, your sales forecast might look something like this: 

SaaS FY24 Sales forecast = Number of expected subscribers x Subscription price

Ultimately, the sales forecasting process is a guess—but it’s an educated one. You’ll use the information you already have to create a data-driven forecasting model. How accurate your forecast is depends on your sales team. The sales team uses facts such as their prospects, current market conditions, and their sales pipeline. But they will also use their experience in the field to decide on final numbers for what they think will sell. Because of this, sales leaders are more likely to have better forecasting accuracy than new members of the sales team.

Sales forecast vs. sales goal

Your sales forecast is based on historical data and current market conditions. While you always hope your sales goals are attainable—and you can use data to estimate what your team is capable of—your goals might not line up directly with your forecast. This can be for a number of reasons, including wanting to create stretch goals that push your sales team beyond what they’ve done in the past or big, pie-in-the-sky goals that boost investor confidence.

How to create a sales forecast

There are different sales forecasting methods, and some are simpler than others. With the steps below, you’ll have a basic understanding of how to create a sales forecast template that you can customize to the method of your choice. 

1. Track your business data

Without details from your past sales, you won’t have anything to base your predictions on. If you don’t have past sales data, you can begin tracking sales now to create a sales forecast in the future. The data you’ll need to track includes:

Number of units sold per month

Revenue of each product by month

Number of units returned or canceled (so you can get an accurate sales calculation)

Other items you can track to make your predictions more accurate include:

Growth percentage

Number of sales representatives

Average sales cycle length

There are different ways to use these data points when forecasting sales. If you want to calculate your sales run rate, which is your projected revenue for the next year, use your revenue from the past month and multiply it by 12. Then, adjust this number based on other relevant data points, like seasonality.

Tip: The best way to track historical data is to use customer relationship management (CRM) software. When you have a CRM strategy in place, you can easily pull data into your sales forecast template and make quick projections.

2. Set your metrics

Before you perform the calculations in your sales forecast template, you need to decide what you’re measuring. The basic questions you should ask are:

What is the product or service you’re selling and forecasting for? Answering this question helps you decide what exactly you’re evaluating. For example, you can investigate future trends for a long-standing product to decide whether it’s worth continuing, or you can predict future sales for a new product. 

How far in the future do you want to make projections? You can decide to make projections for as little as six months or as much as five years in the future. The complexity of your sales forecast is up to you.

How much will you sell each product for, and how do you measure your products? Set your product’s metrics, whether they be units, hours, memberships, or something else. That way, you can calculate revenue on a price-per-unit basis.

How long is your sales cycle? Your sales cycle—also called a sales funnel—is how long it takes for you to make the average sale from beginning to end. Sales cycles are often monthly, quarterly, or yearly. Depending on the product you’re selling, your sales cycle may be unique. Steps in the sales cycle typically include:

Lead generation

Lead qualification

Initial contact

Making an offer

Negotiation

Closing the deal

Tip: You can still project customer growth versus revenue even if your company is in its early phases. If you don’t have enough historical data to use for your sales forecast template, you can use data from a company similar to yours in the market. 

3. Choose a forecasting method

While there are many forecasting methods to choose from, we’ll concentrate on two straightforward approaches to provide a clear understanding of how sales forecasting can be implemented efficiently. The top-down method starts with the total size of the market and works down, while the bottom-up method starts with your business and expands out.

Top-down method: To use the top-down method, start with the total size of the market—or total addressable market (TAM). Then, estimate how much of the market you think your business can capture. For example, if you’re in a large, oversaturated market, you may only capture 3% of the TAM. If the total addressable market is $1 billion, your projected annual sales would be $30 million. 

Bottom-up method: With the bottom-up method, you’ll estimate the total units your company will sell in a sales cycle, then multiply that number by your average cost per unit. You can expand out by adding other variables, like the number of sales reps, department expenses, or website views. The bottom-up forecasting method uses company data to project more specific results. 

You’ll need to choose one method to fill in your sales forecast template, but you can also try both methods to compare results.

Tip: The best forecasting method for you may depend on what type of business you’re running. If your company experiences little fluctuation in revenue, then the top-down forecasting method should work well. The top-down model can also work for new businesses that have little business data to work with. Bottom-up forecasting may be better for seasonal businesses or startups looking to make future budget and staffing decisions.

4. Calculate your sales forecast

You’ve already learned a basic way to calculate revenue using the top-down method. Below, you’ll see another way to estimate your projected sales revenue on an annual scale.

Divide your sales revenue for the year so far by the number of months so far to calculate your average monthly sales rate.

Multiply your average monthly sales rate by the number of months left in the year to calculate your projected sales revenue for the rest of the year.

Add your total sales revenue so far to your projected sales revenue for the rest of the year to calculate your annual sales forecast.

A more generalized way to estimate your future sales revenue for the year is to multiply your total sales revenue from the previous year.

Example: Let’s say your company sells a software application for $300 per unit and you sold 500 units from January to March. Your sales revenue so far is $150,000 ($300 per unit x 500 units sold). You’re three months into the calendar year, so your average monthly sales rate is $50,000 ($150,000 / 3 months). That means your projected sales revenue for the rest of the year is $450,000 ($50,000 x 9 months).

5. Adjust for external factors

A sales forecast predicts future revenue by making assumptions about your growth rate based on past success. But your past success is only one component of your growth rate. There are external factors outside of your control that can affect sales growth—and you should consider them if you want to make accurate projections. 

Some external factors you can adjust your calculations around include:

Inflation rate: Inflation is how much prices increase over a specific time period, and it usually fluctuates based on a country’s overall economic state. You can take your annual sales forecast and factor in inflation rate to ensure you’re not projecting a higher or lower number of sales than the economy will permit.

The competition: Is your market becoming more competitive as time goes on? For example, are you selling software during a tech boom? If so, assess whether your market share will shrink because of rising competition in the coming year(s).

Market changes: The market can shift as people change their behavior. Your audience may spend an average of six hours per day on their phones in one year. In the next year, mental health awareness may cause phone usage to drop. These changes are hard to predict, so you must stay on top of market news.

Industry changes: Industry changes happen when new products and technologies come on the market and make other products obsolete. One instance of this is the invention of AI technology.

Legislation: Although not as common, changes in legislation can affect the way companies sell their products. For example, vaping was a multi-million dollar industry until laws banned the sale of vape products to people under the age of 21. 

Seasonality: Many industries experience seasonality based on how human behavior and human needs change with the seasons. For example, people spend more time inside during the winter, so they may be on their computers more. Retail stores may also experience a jump in sales around Christmas time.

Tip: You can create a comprehensive sales plan to set goals for team members. Aside from revenue targets and training milestones, consider assigning each of these external factors to your team members so they can keep track of essential information. That way, you’ll have your bases covered on anything that may affect future sales growth. 

Sales forecast template

Below you’ll see an example of a software company’s six-month sales forecast template for two products. Product one is a software application, and product two is a software accessory. 

In this sales forecast template, the company used past sales data to fill in each month. They projected their sales would increase by 10% each month because of a 5% increase in inflation and because they gained 5% more of the market. They kept their price per unit the same as the previous year.

Putting both products in the same chart can help the company see that their lower-cost product—the software accessory—brings in more revenue than their higher-cost product. The company can then use this insight to create more low-cost products in the future.

Sales forecast examples

Sales forecasting is not a one-size-fits-all process. It varies significantly across industries and business sizes. Understanding this through practical examples can help businesses identify the most suitable forecasting method for their unique needs.

Sales forecasting example 1: E-commerce

In the e-commerce sector, where trends can shift rapidly, intuitive forecasting is often useful for making quick, informed decisions.

Scenario: An e-commerce retailer specializing in fashion accessories is planning for the upcoming festive season.

Trend analysis phase: The team spends the first week analyzing customer feedback and current fashion trends on social media, using intuitive forecasting to predict which products will be popular.

Inventory planning phase: Based on these insights, the next three weeks are dedicated to selecting and ordering inventory, focusing on products predicted to be in high demand.

Sales monitoring and adjustment: As the holiday season approaches, the team closely monitors early sales data, ready to adjust their inventory and marketing strategies based on real-time sales performance.

This approach allows the e-commerce retailer to stay agile , adapting quickly to market trends and customer preferences.

Sales forecasting example 2: Software development

For a software development company, especially one working with B2B clients, opportunity stage forecasting can help predict sales and manage the sales pipeline effectively.

Scenario: A software development company is launching a new project management tool.

Lead generation and qualification phase: In the initial month, the sales team focuses on generating leads, qualifying them, and categorizing potential clients based on their progress through the sales pipeline.

Proposal and negotiation phase: For the next two months, the team works on creating tailored proposals for high-potential leads and enters negotiation stages, using opportunity stage forecasting to predict the likelihood of deal closures.

Closure and review: In the final phase, the team aims to close deals, review the accuracy of their initial forecasts, and refine their approach based on the outcomes.

Opportunity stage forecasting enables the software company to efficiently manage its sales pipeline , focusing resources on the most promising leads and improving their chances of successful deal closures.

Pair your sales forecast with a strong sales process

A sales forecast is only one part of the larger sales picture. As your team members acquire leads and close deals, you can track them through the sales pipeline. A solid sales plan is the foundation of future success.  

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