As a full-time business plan writer, one of the questions I get asked commonly is how do I project revenues and expenses when the business is not established yet and there is no data. The truth is, there’s always data. It may not be data from the business that is looking to protect their financial statements, but there is data from comparables. This is why the market research and Industry analysis section of the business plan is so important. The market research and Industry analysis section of the business plan creates a basis of assumption for projecting the financial statements. The market research allows you to find data on population growth, income statistics, racial demographics and more. The industry analysis allows you to grab data on your industry and competitors. This includes information such as common industry profit margins, industry wages and more. By looking at this data, you can form an educated guess, also called an assumption, which allows you to project your revenues and expenses. For example, if you are opening up a restaurant, the market research may show data for how many people come into the plaza where you will lease space. The industry analysis will show you food cost and what is commonly going on in the industry. All of this information is used as the basis for your marketing plan and financial projections. When you are an established business, you simply look back at your data. For example, if you have been operating a restaurant for the last three years, then you can look at how much money was made, what was the busy season, what was the most popular selling plate, and more. These will form strong assumptions to project your revenues and expenses next year. You will begin to see a pattern in regards to how much money you’re spending on marketing, or where you are marketing, and how much revenue is being made. This should end up being a mathematical formula. For example, the restaurant owners spent 10000 + marketing a year and made $100,000, and then another year they spent $20,000 on marketing a year and made $200,000, and so on. Now business doesn’t run this smoothly and this linearly, but there will be something that stands out in the data that allows you to mathematically equate and investment in marketing to revenue. This will act as your basis of assumption when projecting and established companies revenues over the next time period. Hope this was helpful. – Nick NicholasCoriano.com
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Hi stranger. Just wanted to let you know that Jesus loves you and so do I <3
Thank you for this,right now i’m working on a business class project and I was so confused on how to calculate the revenue.
trying to get my DUNS number and got stuck at the "annual sales" question. .. . . I'm about to be a junior studying business at a university and I learned more here than in all my business classes. Wish everything was as thorough as this video and it was only 8 mins …
i learned more in this video than in my intro marketing class lol thank you baller
Thank you! This is so helpful!!
Hey Nicholas are you still providing help with business plans.
thank you
Man, thanks for this video. You explained this so well without fancy graphics or animation that none of the other videos I found could accomplish. Sub’d and gonna forward.
This approach sounds odd. This is a top down approach/estimate. According to Steve Banks, this is something startups need to avoid.
Great video
hey man, i need your help as soon as possible.
Appreciate you giving this game for free man. Means a lot and was very helpful.
How to make a cash flow statement for a start-up incubation
Nice simple outline, great guide points for a business plan Keep posting , thanks for the help , appreciate it buddy!
Thank you Nicholas for doing this. Straight to the point. Appreciate it.
This was helpful. Thanks
We are a new tech start-up company. We need our BS done by a professional. Can you help? We are based in uk
Loved the way you explain
I love your videos. I share them in my entrepreneurship classes. You are very informative and engaging.