How to Forecast Next Year’s Business Profitability
Forecasting your business’s performance forms the basis for planning and strategizing for the well-being of your business. But, making accurate forecasts is a difficult task and when done incorrectly can become uncertain and costly. Accurate forecasts will help you identify financing needs, optimize your pricing, plan production, time major expenditures and monitor your cash flow. Here is how you can predict future business performance:
Utilize Past Data Trend Calculate company records for revenue-stream patterns over time. It’s better if you have data over extended period of time. Calculate percent increase (or decrease) each year. Extend the trend into future years to come up with your revenue projection.
To make accurate and dependable business forecasts based on past months performance, you need to use proper tools. With EpicLedger’s financial dashboard Trend Analysis, you can view your business’s financial data from the past 12 months, 24 months and 60 months.
Additionally, Epicledger's Strategic Profit Modeling (SPM) tool to make revenue, expense and net profit margin predictions. For example, if you think it’s easier to increase your revenue rather than decrease your expenses, you can use the SPM tool to predict your net profit margin for next year based the increase in your revenue.
To learn more about the dashboard, request a free demo today!