How do you project small business revenue?

2 Choose a projection method

There are different methods to project your revenue, depending on your business model, data availability, and level of detail. The historical method involves using past sales data to predict future revenue, taking into account growth rate, inflation, and market changes. The bottom-up method involves starting with unit sales and multiplying them by unit price, then adding up the revenue from different products, services, or segments. Alternatively, the top-down method starts with the total market size and applies your market share, then adjusts for pricing, marketing, and distribution strategies. You can use one or a combination of these methods, depending on your needs and preferences.

3 Make assumptions and scenarios

No matter which method you use, you will need to make some assumptions and scenarios to project your revenue. These are the factors that affect your sales, such as customer behavior, economic conditions, industry trends, marketing campaigns, and operational costs. You should base your assumptions on realistic and reliable data, and document them clearly. You should also create different scenarios to account for the best-case, worst-case, and expected outcomes of your projection.

4 Create a spreadsheet

A spreadsheet is a useful tool to organize and calculate your revenue projection. You can use a software like Excel or Google Sheets, or a template from online sources. You should create a spreadsheet that shows your revenue projection for a specific period, such as a month, quarter, or year. You should also include the variables, assumptions, and scenarios that you used in your projection. You should format your spreadsheet to make it easy to read and understand.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?