How can you explain the uncertainties in financial projections without scaring your

audience?

A financial projection is a forecast of future revenues and expenses. Typically, the

projection will account for internal or historical data and will include a prediction of external

market factors. Projections can be a tricky business as you try to anticipate expenses while trying

to predict how quickly your business will grow. Key elements of a financial projections are the

income statement, cash flow projection, and the balance sheet. (Sullivan, 2020)

Some important steps to build a useful forecast or model are knowing how to use excel

,understand your audience, talk to your team, then talk some more, question everything, when

you’ve exhausted internal knowledge really do get out of the building, when it comes to tabs,

more is definitely less, alternative facts, make no assumption, ask what else?.(Shah,2017)

Using multiple scenarios and include the positive outcome as well as a cautious outcome.

By using multiple scenarios, you give the audience realistic expectations and it also helps with

you strategic planning. Starting with projected expenses, and fixed expenses like rent and

utilities as well as the possible fluctuations in these expenses can cut down on the panic in the

audience as well. Be clear when identifying your assumptions as these are things that are outside

of your control. Be sure to outline each step in your sales process, have projections for each step

of the sales funnel. Always find comparisons by assessing the plausibility of your financial

forecasts by comparing your projections to the results of comparable companies. (Boitnott,2015)

References:
Boitnott, J. (2015, June 02). 6 Ways to Make Financial Forecasts More Realistic. Retrieved

December 17, 2020, from https://www.entrepreneur.com/article/246592

Shah, A. (2017, November 29). Forecasting for Uncertainty. Retrieved December 17, 2020, from

https://smallbusinessforum.co/forecasting-for-uncertainty-3c6d9af91f22

Sullivan, M. (2020, September 08). Understand Financial Projections & Forecasting. Retrieved

December 17, 2020, from https://quickbooks.intuit.com/r/forecasting/understanding-

financial-projections-forecasting/