The Ledger

Bottom-Up Forecasting Can Enhance Your Top-Line Predictions

Financial projections are a fundamental component of the business plan and are important for many reasons. When it comes to developing financial projections, there are two options: top-down and bottom up. The more strategic option is bottom up forecasting, which is where the sales revenue estimates of each product or product line are combined to gauge revenue estimates for the entire firm. This method is seen as a strategic option because it is an approach where finance leaders can take a real look at their current situation and capabilities, and they are able to see where the business can reasonably go. Top-down forecasting can be a big gamble, especially for start-up companies.

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