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10 Step Venture eMentoring Program™
Session 6: Forecasting

Forecasting is where you will determine and organize the financial information for your business, showing costs and revenues. The forecasts become your budget. There is nothing mysterious about forecasting – it is a thoughtful process of thinking about each part of the business operation and determining what kinds of expenses will be generated by these activities. Think about your rent, phone system and all other operational issues that have associated costs. The process will help you to also identify the sources and amounts of revenues that will be generated.

The first exercise in this step is to read an overview titled, "Why Forecast," which will give you an idea of what you are doing and why. The next exercise focuses on calculating Revenues and Expenses. Next, "Forecasting – the Seven Steps" will help you think through this financial projection process, and give you a format to list your sources of expenses and revenues. Two separate and very important forecasting components follow this; one on breakeven analysis and one on cash flow management. With a better grasp of forecasting components, you will move on to projecting the profit and loss for your organization, which will demonstrate how all of these pieces fit together and why they are important.

How all of these pieces fit together is not only important from a profit and loss perspective overall, but also in how each component relates to each other. Comparing the numbers to each other gives you important insights about certain economic efficiencies in your operation, which are determined by different ratios. To help you understand this as well as compare your ratios to industry averages as a benchmark, you will find links to financial calculator tools.

Once the data is assembled, if you need help organizing this data into an actual forecast, you can sit down with a resource professional. The good news is that you will have already done the hard part. You have thought through how the business functions, what costs are associated, and how you are going to generate revenues. Once you have this information, they can then show you how the data is used in developing a forecast of your operation for the next two or three years.

  1. Why Forecast?
  2. Revenue/Expense
  3. Forecasting – 7 Steps
  4. Break-even Analysis
  5. Cash Flow Management
  6. Profit/Loss Forecast
  7. Ratios and Financial Calculators
  8. Forecast Counseling Resources
  9. Summary

Now – on to 6a: Why Forecast?

Click here to start


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