You will find a monthly financial projection tailored to your project in our list of 200+ financial plans
All our financial plans do include a monthly financial projection.
How can you create a monthly financial projection without feeling overwhelmed?
In this article, we provide a free tool to do so. If you're looking for something more tailored to your specific project, feel free to browse our list of financial plans, customized for over 200 different project types here.
We'll also address the following questions:
How can one estimate the projected monthly revenue for a new business?
What are the main fixed costs to include in a monthly financial projection?
How should one estimate variable costs in a monthly financial projection?
What is a realistic net profit margin for a small business?
How can unforeseen expenses be incorporated into a monthly financial projection?
What tools can help simplify the creation of monthly financial projections?
How can the accuracy of monthly financial projections be validated?
The document available for download is a sample financial forecast. Inside, you'll find the calculations, formulas, and data needed to get a monthly financial projection as well as a full financial analysis.
This document, offered free of charge, is tailored specifically to the realities of running a restaurant. If you need a tool for your own project, feel free to browse through our list of financial forecasts.
If you have any questions, don't hesitate to contact us.
Here Are the Steps to Create a Monthly Financial Projection
To skip all these steps, you can simply download a financial forecast tailored to your industry.
- 1. Identify Initial Costs:
Start by listing all the initial costs required to launch your business. This may include website development, marketing, legal fees, equipment, and any other startup expenses. Research and gather estimates for each item to get a clear picture of your total startup costs.
- 2. Estimate Monthly Operating Expenses:
Identify all the recurring monthly expenses necessary to keep your business running. This could include website maintenance, marketing, salaries, rent, utilities, and other miscellaneous expenses. Sum these costs to determine your total monthly operating expenses.
- 3. Project Revenue:
Estimate your monthly revenue based on your pricing model and expected customer acquisition. For example, if you plan to charge a subscription fee, calculate the revenue based on the number of subscribers you aim to acquire each month. Consider any growth rates or seasonal variations that might affect your revenue.
- 4. Calculate Monthly Profit or Loss:
Subtract your monthly operating expenses from your projected revenue to determine your monthly profit or loss. This will help you understand your financial position each month and identify when you might break even or start making a profit.
- 5. Adjust for Growth and Additional Costs:
As you project your finances over several months, adjust for expected growth in revenue and any additional costs that may arise. This could include scaling up operations, hiring more staff, or increasing marketing efforts. Continuously update your projections to reflect these changes.
- 6. Review and Refine:
Regularly review your financial projections and compare them with actual performance. Refine your estimates and assumptions based on real data and feedback. This ongoing process will help you stay on track and make informed financial decisions.
What Should Be Included in a Monthly Financial Projection?
Here are the key elements that should be included, all of which you will find in our financial forecasts tailored to 200+ different business projects.
| Element | Description | Importance | Frequency |
|---|---|---|---|
| Revenue Projections | Estimated income from sales, services, or other sources. | Critical for understanding potential income and planning expenses. | Monthly |
| Cost of Goods Sold (COGS) | Direct costs attributable to the production of the goods sold by the company. | Essential for calculating gross profit. | Monthly |
| Operating Expenses | Expenses required for the day-to-day functioning of the business, such as rent, utilities, and salaries. | Necessary for understanding the cost structure and profitability. | Monthly |
| Net Profit | The actual profit after working expenses not included in the calculation of gross profit have been paid. | Key indicator of business health and performance. | Monthly |
| Cash Flow Projections | Estimates of the amount of cash expected to flow in and out of the business. | Vital for ensuring the business can meet its financial obligations. | Monthly |
| Accounts Receivable | Money owed to the business by its customers for goods or services delivered. | Important for managing cash flow and credit policies. | Monthly |
| Accounts Payable | Money the business owes to suppliers and creditors. | Crucial for managing cash flow and maintaining good supplier relationships. | Monthly |
| Capital Expenditures | Funds used by a company to acquire, upgrade, and maintain physical assets such as property, industrial buildings, or equipment. | Necessary for long-term planning and investment. | Monthly |
| Debt Service | The cash required to cover the repayment of interest and principal on a debt for a particular period. | Important for understanding financial obligations and planning for debt repayment. | Monthly |
| Break-Even Analysis | Calculation to determine the level of sales needed to cover all costs. | Helps in setting sales targets and pricing strategies. | Monthly |
| Key Performance Indicators (KPIs) | Metrics that help track the performance and health of the business. | Essential for monitoring progress and making informed decisions. | Monthly |
Our financial forecasts are comprehensive and will help you secure financing from the bank or investors.
Common Questions You May Have
Reading these articles might also interest you:
- How to forecast your company's financials?
- How to forecast operating income in Excel?
- How to forecast cash flow for better financial planning?
How do I start creating a monthly financial projection?
Begin by gathering all your financial data, including income statements, balance sheets, and cash flow statements from previous months.
Use this historical data to identify trends and patterns that can inform your projections.
Then, create a template that includes sections for revenue, expenses, and net income to systematically organize your projections.
What tools can help simplify the process of creating financial projections?
Spreadsheet software like Microsoft Excel or Google Sheets can be very useful for creating detailed financial projections.
There are also specialized financial planning software options like QuickBooks or PlanGuru that offer more advanced features.
These tools often come with templates and automated calculations to make the process less overwhelming.
How accurate should my financial projections be?
While you should strive for accuracy, understand that projections are inherently estimates and will not be 100% precise.
Aim for a margin of error of 5% to 10% to account for unforeseen variables and market conditions.
Regularly updating your projections with actual data can help improve their accuracy over time.
What are the key components of a monthly financial projection?
The main components include projected revenue, projected expenses, and projected net income.
Revenue should be broken down by different streams or products, while expenses should include both fixed and variable costs.
Net income is calculated by subtracting total expenses from total revenue.
How do I estimate future revenue for my projections?
Use historical sales data to identify trends and seasonality in your revenue streams.
Consider external factors such as market conditions, economic indicators, and industry benchmarks.
For a more conservative estimate, you might project revenue growth at a rate of 3% to 5% annually.
How often should I update my financial projections?
It's advisable to update your financial projections on a monthly basis to reflect the most current data.
This allows you to make adjustments based on actual performance and changing market conditions.
Regular updates help ensure that your projections remain relevant and useful for decision-making.
What is a reasonable profit margin to expect in my projections?
Profit margins can vary widely depending on the industry and business model.
For many small businesses, a profit margin of 10% to 20% is considered healthy.
However, you should research industry-specific benchmarks to set realistic expectations for your business.