What You Need to Create Financial Projections for Your Business

Businesses large and small should have a grasp of their expenses and income to turn a profit. Keeping good financial records is the key to understanding revenue, and financial projections can help you look at your business’s future and estimate profit over an extended period of time.

The best way to create financial projections is to combine an organized inventory, the right paperwork, and some accounting acumen. Using both accounting software and eChannelHub’s inventory management software can also help you keep the minutiae of running a business in order and avoid costly errors.

Sales and expense information from cash flow and income statements form the basis of a company’s financial projections. Your sales projections should include information about the sales of past years, including peaks and seasonal lows. This past data should include how much you sell your goods for, how many items you expect to sell, and how you plan to price your items. Projections can cover multiple years, but you may want to start off forecasting for a single year.

Expense projections should include information about normal fees and payments as well as unexpected occurrences. This includes rent, employee wages, insurance, legal fees, and the cost of unplanned negative events.

With these projections, be sure to include a balance sheet. This tool evaluates the health of your business and includes more in-depth information about your company’s holdings and value. Using accounting software helps you pull this information together quickly, so look around for one of these databases before you start compiling your financial projections. Besides accounting software, there’s also forecasting software to help you through the process — all the better if all these systems integrate seamlessly.

You can’t form an accurate projection of your company’s future without having an assessment of your inventory. Managing your goods can seem daunting, but advanced inventory management software gives you the efficiency of a team without the need to manage multiple employees. This software can compile data from multiple selling platforms while updating stock in real-time and automating order management. If you keep your stock in different warehouses and have trouble accessing it, you can use inventory software to scan mobile barcodes on items and fulfill orders in different locations. Automating this process helps you make accurate projections over the long term.

To keep track of the more in-depth data on your business, it might be wise to make use of accounting software. However, you need some decent accounting skills yourself to keep track of the basics of running your business. It’s best to know something about financial planning, balancing books, and tracking invoices before you dive headfirst into managing a small company.

One of the best ways to develop these abilities is through further education. An online accounting degree may meet the needs of many small business owners and entrepreneurs. It can help you develop the accounting skills needed to grow your business, including auditing and reading financial statements, while also enabling you to balance your other responsibilities.

Creating financial projections involves paperwork regarding your business’s expenses, income, and gross revenue. By using software made for efficient inventory management, financial planning, and brushing up on your accounting skills, you can accurately predict your company’s path forward in the coming years. Find out about eChannelHub’s competitive pricing and schedule a demo today.