The primary forecast every business needs. Revenue forecasts anchor everything downstream - expense planning, cash projections, hiring decisions, capital allocation.
Definition
Revenue Forecast - a projection of future revenue based on current activity, historical patterns, and explicit assumptions about what will change. Built bottom-up, top-down, by driver, or by pipeline depending on business model.
Common uses
- Cash flow projection - revenue feeds into the cash forecast
- Resource planning - hiring, marketing budgets, capacity decisions
- Investor and lender conversations - the basis for funding decisions
Watch out
Optimism inflates revenue forecasts. The realistic forecast usually feels uncomfortably slow compared to gut estimates - check assumptions against historical track record.