| name | forecasting |
| description | Build a financial forecast (revenue, P&L, cash) from drivers and assumptions, with a clear method and ranges. Use when projecting performance for planning, valuation, or fundraising. |
forecasting
A forecast is a driver tree plus assumptions. Make the drivers and the method explicit.
Process
- Pick the method: driver-based (units x price, funnel, cohorts) > naive growth %. Bottom-up where possible.
- Anchor to sourced historicals and a base rate; don't extrapolate a recent spike blindly.
- Build the drivers: revenue drivers, margin assumptions, cost structure (fixed vs. variable), working
capital, capex. State each assumption and where it came from.
- Project the P&L (and cash if needed) over the horizon; keep it consistent with the drivers.
- Ranges + scenarios: base/bull/bear, and the 2-3 assumptions that matter most (
scenario-analysis).
- Reality-check against capacity, market size, and history - flag anything that implies the impossible.
Output
- The forecast (driver assumptions + projected P&L), a base/bull/bear range, and the key swing assumptions -
all labeled as estimates.
Guardrails
- Projections labeled with assumptions (
projection-guard); historicals sourced (data-integrity).
- Give ranges, not false precision; sanity-check against base rates (
methodology).
