Revenue forecast: build your revenue from clear streams

Video: how to build a well-founded revenue forecast in the Business Planner.

The revenue forecast is the number a financier looks at first and doubts most. A total without explanation says little. A forecast built from recognizable parts, with clear growth for each part, can be followed and checked. That is why the Business Planner works with revenue streams.

What is a revenue stream?

A stream is a separate source of income: a product, a service or a subscription. Each stream gets its own amount, its own growth and its own direct costs. At the top of the tab, you see the revenue in year one, the total over the planning horizon and the trend in a chart. Below that are the streams, each with year one and the total.

How to set up a stream

1. 01

   Name and link

   Give the stream a name. If you entered products with a price and expected volume in the marketing module, you can link the stream to that product.

2. 02

   Growth model

   Choose a constant amount, linear growth with a fixed percentage per year, or your own amount for each year. Use a negative percentage for decline.

3. 03

   Direct costs

   Indicate which share of the revenue goes straight to purchasing or production. The planner uses this to calculate your gross margin.

4. 04

   Start and VAT

   Let the stream start later if you introduce a service after opening, and switch off VAT for exempt revenue.

Five streams in the salon

The demo salon in Amsterdam has five streams: haircuts, color and care treatments, hair care product sales, a haircut subscription and chair rental to a freelance stylist. Each stream grows at its own pace. The subscription grows faster than the haircuts, because the salon is actively moving regular clients over. For the hair care products, the direct costs are higher than for a treatment, because the products have to be bought in first.

Revenue a financier can follow

• Start from clients: number of clients times price times visits per year.
• Be careful with growth: explain where the growth comes from, such as an extra stylist or a new service.
• Split what differs: services with a different margin or growth get their own stream.
• Test your assumptions: compare your margins with the industry figures on Firmfocus.