Financial forecasting is simple
Financial forecasting intimidates a lot of people.
How can I know what my revenue will be when I don't know how much customers will buy?
How can I predict my costs when I'm not sure who I'll need to hire next quarter?
Do I need to estimate EVERY cost I'll pay? That's far too much tedious work!
Forcasting can be a pain in the butt.
But it doesn’t need to be! It's actually very simple:
To forecast is as simple as asking, “What is reasonable?”
How do you decide what’s reasonable?
Last year's data
An average from this year's data so far
An extrapolation from sales, market trends, or scenario planning
What some trusted expert told you will happen
A gut feeling or guess
Your tea leaves
Here’s the truth:
No one knows the future.
You just take whatever data you have
And say, “Given this, what is reasonable?”
That’s it. That’s literally it.
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