The idea of predicting revenue can be a daunting one. After all, nothing is certain, and even conditions you're fairly confident about can change unexpectedly.
One way around this is to put together multiple predictions and make a corresponding financial plan for each. This will ensure you're covered whatever the future brings. Otherwise, for example, a single projection that's overly pessimistic could leave you at a loss about what to do with unexpected extra revenue. There are undoubtedly worse problems to have, but at the same time, being unprepared to handle surplus funds could lead to them being squandered. This could inhibit the growth of your business at a time when your company is in an optimum position to expand and flourish.
Conversely, an overly optimistic forecast will leave you with the opposite problem, and will likely result in a last-minute, cost-cutting scramble. As in other areas of life, an 11th-hour race against the clock can cause sloppy mistakes.
There are several methods you can use to help get your revenue predictions as accurate as possible, according to WAHM, a leading resource for moms who work from home. These include:
Making comparisons with financial records from previous years
Nobody knows the idiosyncrasies of a business or the quirks of a specific field better than an industry insider like you. Looking back at old business banking statements and company records can be a great way to remind yourself of which times of the year were most profitable and when the enterprise hit a speed bump. However, the age of your business could be a limiting factor here. As the news source notes, "The more financial history you have, the more accurate you will be able to make your comparisons. However, if you are in the first years of your business, using this method will be likely just as accurate as guessing." In this case, do the next best thing and use data from companies similar to yours.
Comparing marketing strategy
Not all your company's marketing campaigns have lived up to expectations in terms of effectively reaching your targeted demographic, and that's OK. Take high and low respond rates for your hits and misses to help determine conservative and optimistic revenue forecasts.
Last and definitely least is guessing. Although this approach is inadvisable, taking an educated guess can give you a rough idea of what to plan for. That said, don't rely on this method more than you have to.