Create a revenue forecast
The revenue forecast is the most important – and most difficult – assumption in the financial plan. It must be ambitious enough to convince and realistic enough to hold up.
Bottom-up instead of top-down
Calculate from the bottom up: how many customers do you reach per month, what share of them buys, at what price and how often? This bottom-up logic is more convincing than an arbitrary percentage of a large market.
Disclose your assumptions
Every revenue figure is based on assumptions about reach, conversion and price. Write these assumptions down explicitly. That way the reader can follow your forecast – and you can later check it against reality.
Calculate scenarios
Plan in three scenarios: pessimistic, realistic, optimistic. This shows that you understand the risks and helps you cover your capital requirements even in the worst case.
Frequently asked questions
How do I estimate revenue without past figures?
Bottom-up, using reach, conversion rate and price. Use industry benchmarks and your own first tests to check that the assumptions are plausible.
How optimistic can I be in my planning?
Plan realistically and back up your assumptions. Overly optimistic forecasts cost credibility and lead to the wrong capital requirements.
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