# How to Project Revenues

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Projecting company revenues is an important part of business planning. Usually projecting one year ahead is sufficient for any business, as it is difficult to project more than 12 months into the future. Building a revenue projection spreadsheet will help you see the numbers more clearly, and the spreadsheet can be designed to do the math for you. The information in a spreadsheet can be used to create visually appealing graphics, like pie charts or bar charts, for presentations to clients and investors. Take the whole project and divide it up into three separate parts: current business, sales in the works and new business.

Talk to your current customers and determine their ongoing needs for your products and services. This information will help you plan and prepare to meet these needs. Get enough detail from your customers to have an idea of order size and timing so expenses, revenues and orders can be planned for. This information should allow you to assign a number to the total amount of new business. Multiply the total amount of projected new business by the percentage of probability that the orders will be placed and extrapolate when these orders are likely to materialize. For example, if the percentage of probability is 60 percent, and the total possible sales projection is \$100,000, total possible new business is \$60,000. Make decisions about staffing and purchase orders based on when the orders could materialize.

Factor in the amount of new business that clients have expressed interest in providing you with. Assign the total of the new business to the time frame that the business will likely arrive, again multiplied by the percentage of probability.

Use historical sales data to help you determine the amount of revenue you can generate in new sales or sales to customers you have not met yet. If your sales cycle is long, add those projected numbers to the appropriate time period. For example, if it takes two months on average to close a new business deal, begin adding potential sales figures to projections two months away.

Update your projections regularly. Projections have a short life span and must be regularly updated to remain helpful.

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