Quote from bsdinsight on 13 November 2023, 17:44

Your Revenue forecast is the most sensitive area of your revenue…

as every business has their own nuances.

But they all follow the same principles

Today, we going to show you the best 10 ways to forecast revenue 👇

1️⃣ Sales reps ➡️ Each sales rep * monthly quota * attainment %

Here you assume that each sales rep hired has a quota in terms of customers / revenue, and they hit that quota by a certain %

It’s also important to include a ramp period, as new hires won’t be hitting their quota right from day 1

2️⃣ Ad spend ➡️ Ad spend / CAC * Conversion rate

This is a real common one, and it works great for simplicity.

You can also flip it so that you calculate CAC by an assumed amount of customers closed per ad spend

3️⃣ Organic ➡️ Total monthly web traffic * conversion rate (to lead) * conversion rate (to customer)

Great for B2B companies who don’t require a sales process to close a customer

4️⃣ Partnerships ➡️ Total Partners * after referrals per partner * conversion rate

You can also factor in a rev share to the partner her

5️⃣ Referrals ➡️ Total Customers * referral rate * conversion rate

The higher your Net Promoter Score, the higher the referrals

6️⃣ Conferences & events ➡️ Conferences attended * leads per event * conversion rate

If you are the one hosting the conference, the formula would be a bit different, factoring in sponsorship revenue

7️⃣ SEO ➡️ Backlinks / articles post * avg visitors * conversion rate

8️⃣ Existing customers ➡️ Analyze renewal dates * renewal likelihood

This one is key…don’t forget about renewals from existing customers

9️⃣ Pipeline ➡️ Contracts in CRM * close likelihood

It’s common to apply a close likelihood % based off of the stage in your CRM

🔟 Expansion ➡️Total ARR / MRR * expansion %

This is very common with SaaS companies

Those are our 10 ways to forecast revenue after building 100s of financial models for companies and startups