How to Project Future Profits

It is important to know where you are going in your business and project future profits. You can't accurately figure out where you're going without knowing where you have been. Find a structured plan to track your achievement, set measurable goals and project future profits.

Instructions

Difficulty: Moderately Challenging

1. Know your company's present financial condition. Keep good accounting records and stay informed regarding the company's profit and loss standing.
2. Make an informed guess to project your future profits. Look at the expected economy and try to determine how it will affect your clients or the product distribution.
3. Prepare a plan to recession-proof your business. You may have to discontinue certain services or products and add other ones that will be in demand in an economic slow down.
4. Decide how much money you want to make next year based on your present profit and expenditures. Evaluate your expenses and find ways to cut costs without cutting quality service and products.
5. Project your expenses for the next year; it's better to overestimate expenses. Consider increased payroll including overtime pay, transportation costs, supplies, rent, insurance, taxes, employee training and other business specific costs.
6. Identify your present and potential sources of revenue to project future profits. Review your customer records and purchasing practices, and determine prospective client contacts based on their probable need for the product you sell.
7. Develop more than one break-even plan to help you weather tough economic times. Short and long-term business decisions may hinge on a break-even plan.