Financial projections play an essential role in the success of any large, medium, or small business. Revenue projection, sales projection, burn rate, and your cash flow statement represent data that can give you a clear idea of how well your business is doing now and how well you can expect to do in the future.
Your balance sheet serves as a starting point for revenue projection and other financial projections. Accurate revenue projections matter because they help indicate the estimated income your company may expect to receive over a specific timeframe.
Projecting business revenue can help business owners know what to expect in the months ahead. Accurate revenue projections can assist business owners who are:
- Putting together a new business plan
- Revamping your business model
- Completing business planning for an upcoming financial quarter
- Considering introducing new products or services
As with any financial planning, your revenue projection is only as accurate as the tools you use and the data you enter. Let’s explore some free revenue projection template tools as well as various ways of forecasting revenue in different industries.
Importance of Projecting Revenue
Revenue projection differs from sales forecasting because sales forecasting relates specifically to sales of specific products or services over a period of time. These figures may be based on the cost of goods sold and gross profit without considering operating expenses.
Businesses may use sales forecasting to predict their company’s monthly sales and expected growth rate. Business owners or sales managers may use a sales forecast template to help the sales team set realistic goals and make adjustments if it looks like monthly sales goals won’t be met.
On the other hand, revenue projections relate directly to the revenue a business expects to bring over a period of time. It is a function of financial statements, historical data, operating expenses, and profit margins.
Accurate financial projections, in both cases, depending on how well your sales team estimates its success. It can be hard to be objective about the likelihood of deals in a sales funnel closing within a specific period of time.
Inaccuracies may also skew projections in your cash flow statement. Consider several key financial ratios to create more accurate revenue projections:
Gross margin – Review historical data and income statements, including accounts receivable, to calculate the difference between operating expenses plus direct costs, and total revenue to see your gross margin. Watch out for discrepancies over different periods of time. You can make aggressive or conservative projections that can change your gross margin projections dramatically.
Operating profit margin – Subtract your total operating expenses from total revenue to determine your operating profit margin.
Headcount per client – The number of people in your company can directly affect your profit margins and revenue projection. Are you running a lean organization? Do you need to scale up to manage more clients and sales?
Real estate professionals, in particular, may face specific and unique challenges with revenue projection. As in any business, real estate experts will want to look at:
- Operating expenses (fixed and variable costs)
- Market changes
Rather than looking at gross profit margins, Realtors may look at their total revenue as a function of their commissions. On the other hand, real estate investors will calculate total revenue based on total income after expenses.
Revenue projections for real estate investors may be challenging due to vacancies that reduce cash flow. AI-based software to assist with revenue projections uses historical data to calculate vacancies’ likelihood during any given time frame.
Using Spreadsheets For Your Financial Projections
Businesses can use Microsoft Excel or Google Sheets, spreadsheets for revenue projection. These may not be the most efficient or most accurate tools, however. Your revenue projections will only be as accurate as the data entered on the spreadsheet template.
Let’s look at the pros and cons of using a Microsoft Excel template or spreadsheet created in Google Sheets for your revenue projection.
- Cloud-based Google Sheets gives anyone in your organization access to data
- Simplified format most people can use, read, and understand
- Easy to share if your organization uses cloud-based Google Drive or Microsoft Office
- Manual process of exporting data from a CRM tool can lead to errors and inaccuracies
- Once you export the data, it may be out-of-date within days – or hours
- No real-time forecasting
- One typo can create inaccurate projections, which can lead to disaster for enterprise organizations
- Anyone in the organization can modify the data, which can lead to errors and inconsistencies
- Does not integrate with CRM tools
Free Spreadsheet Revenue Projection Templates & Resources
If you’re looking for free revenue projection templates, you can find many examples online. These tools can help your organization get started in revenue forecasting. You can find templates for PowerPoint, Excel, and Google Sheets.
But they may not provide all the features and functionality you need or the flexibility of SaaS software for revenue projection and sales forecasting.
- Free Revenue Projection Templates
- Sales Forecast Templates
- Revenue Projection Calculator Tool
- Revenue Projection Powerpoints
revVana Automates Projecting Sales Revenue
The revVana cloud-based SaaS platform automates the revenue projection process by integrating with your CRM system. revVana uses sophisticated AI algorithms to create a projected revenue model that makes sense for your business, based on historical data, sales pipelines, and sales projections.
revVana provides real-time revenue model generation using revVana Insights, state-of-the-art revenue realization analytics. Analyze and compare your expected sales forecasting against actual revenue, sales quotes, and corporate budgets for real-time insights.
revVana can help business owners from large-scale real estate investors to restaurant owners, retail companies, and eCommerce firms accurately predict revenue based on historical data and market conditions.
Revenue Projection Tools
Creating accurate revenue projection figures requires more than just the right spreadsheets or software. Understanding the process can help you leverage your CRM sales data for more accurate financial planning.
Some of the elements that go into revenue projections include:
Your total addressable market – Using historical data and market research, determines the number of potential customers in your target market.
Target market growth rate – Can you expand this market? Will your target market grow naturally?
Conversion rate – What percentage of your target market can you convert into leads and, finally, into customers?
Number of projected customers – How many sales can you expect to make in a given time period?
Unit price per sale – What is the unit price for each sale?
You can see that revenue projection isn’t an exact science because it relies on reviewing historical sales data and estimating market growth and sales success.
However, using AI algorithms in the revVana SaaS platform, sales managers, accounting teams, business owners, and CFOs can replace judgment-driven projections with accurate forecasts based on historical data, balance sheets, and cash flow statements.
Overall, you can strive for more accurate revenue projections using all the tools in your arsenal, including communication between your sales and accounting teams, and platforms like SalesForce.
Some businesses start using financial projections templates in Excel or Google Sheets, and later move to a SaaS platform. When your forecasting tools integrate with SalesForce, you can be assured of more accurate, real-time actionable insights to enable seamless business growth.