Is there a recommended approach for developing a forecast and financial projections?
The method that you use to develop your financial projections is very important. As a general rule, forecasts developed using a “top-down” approach are widely discouraged. As the name implies, this type of forecast starts with a total market size number and revenue or unit projections are simply based on a certain percentage of that number. While this method is relatively painless, it invariably lacks and the substance and credibility that your need to convince an investor that your forecast is accurate and reasonable. The preferred method and one that most Investors demand is a bottom-up forecast where you are able to identify who your customers are or will be, where they’re located, how large they are, who the decision maker is and so on. From an investor’s perspective, you can never know too much about your customer base. The bottom line is preparation. Your ability to support and defend the information in the business plan is just as important as the plan itself. Question: I know t
