Back to Revenue Systems
Section 15 · Revenue Forecasting
Revenue Forecasting: Plan The Number Before You Need It
A simple forecast turns 'I hope' into 'I have a plan'.
Revenue
Growth
Why it works
Forecasting reveals the activity required to hit the number, not just the wish.
Connects to
Revenue
Growth
When to use it
Quarterly minimum. Monthly for fast-moving businesses.
When NOT to use it
Don't forecast in a vacuum — base it on real conversion rates and pipeline.
How to use it
- Start with revenue goal → divide by average order value = customers needed.
- Divide customers by conversion rate = leads needed.
- Divide leads by traffic → conversion rate = traffic needed.
- Model 3 scenarios: pessimistic, realistic, ambitious. Plan to the realistic.
- Review monthly. Adjust the activity, not the goal.
Examples
Bottom-up forecast
$120k goal → AOV $500 → 240 customers → 5% close → 4,800 leads → 100k visits.
Cohort forecast
Model existing MRR + expected new MRR − expected churned MRR each month.