Business Forecasts & Projections

Business Forecasts

Business forecasts are synonymous with the word budget.  A forecast provides management with a direction of expected month-to-month operations.  The benefits of a forecast include the following:

  • Puts you in control of your business rather than your business in control of you
  • Allows management to make on the spot adjustments when expected operations are not being achieved
  • Essential for monitoring the product cost components of material, labor and overhead to maintain the desired gross profit margin (example: manufacturing companies)
  • Mandatory in today’s economic environment for non-profit organizations

Business Projections

Business projections are prepared under a “what if” transaction and are the due diligence step in the decision making process of:

  • A synergistic business acquisition
  • Construction or acquisition of a building

Business forecasts are generally prepared on a monthly, twelve month forward outlook.  Business projections are generally prepared over a three year period, month-to-month.  Both business forecasts and projections consist of the following:

  • Statements of income
  • Statements of cash flow (tax effected)
  • Balance sheets
  • Supporting schedules