Why are financial projections necessary?
Financial projections are estimates of future business activities. By estimating the future, you have a target to shoot at. You have a frame of reference, even if the projection is not highly accurate. It is always easier to make business decisions if those decisions are pointed at some target or objective. Financial projections are sometimes required for you to communicate with others. If you seek a business loan, for example, your bank will want to see what your expectations are about your future business activities. This is one way they determine your chances of repaying the loan. The chief value of financial projections for a business owner is not so much the attempt to predict the future with accuracy as it is a plan to set a target or goal to work toward. For more information on this topic, contact your local SBDC.
Financial projections are estimates of future business activities. By estimating the future, you have a target to shoot at. You have a frame of reference, even if the projection is not highly accurate. The chief value of financial projections for a business owner is not so much the attempt to predict the future with accuracy, as it is a plan to set a target or goal to work toward.
