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Factors to consider while creating financial projections by Cynthia Bassett Hartwig, CPA


When creating financial projections, consider the following elements:

  • Economic indicators

  • Strategic goals

  • Expected shifts in pricing, cost, and expenditure rates

  • Consumer behavior and potential moves by rivals

  • Capital needed to fulfill strategic goals

In the process of projecting revenue, take into account these factors:

  • The rate of market expansion

  • The feasibility of raising our prices

  • The anticipated trajectory of our market share—will it rise or fall, and for what reasons?

  • The products likely to experience a sales downturn as a result of their life cycle stages or the launch of rival products

  • The introduction of new offerings by both our enterprise and our competitors

  • The overarching economic premises underlying the strategy

When projecting costs and expenses, reflect on the following aspects:

  • The impact on major expenses like key materials, labor, and other costs including payroll

  • The prevailing inflation rate

  • The additional staffing needed to implement the plan

  • The potential for operational efficiencies and cost-saving measures

Consider these points while projecting assets and investments:

  • Whether an expansion in capacity is necessary to meet the targeted sales figures

  • The anticipated amount of receivables and inventory needed


When estimating the cost of capital and financing, consider:

  • Any intended alterations to the proportion of debt and equity in the company’s capital structure

  • The necessity for extra funding to carry out the strategic plan

  • The evolving risk profile of the business—whether it’s becoming riskier or more secure

  • The expected trends in interest rates throughout the duration of the plan

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