Understanding the different financial forecasting methods and how to use them is important to develop your business plan or manage your business’s finances.
Forecasting helps you identify when you can expect the capital you need to be profitable or grow your business. For external funding, financial forecasts help convince lenders and investors that your business will be profitable and offer them a return on investment. For internal purposes, accurate forecasting enables you to budget for your new business and benchmark your milestones.
In this article, we’ll break down how financial forecasting works, the seven financial forecasting methods, and the types of forecasting you can use.