Preliminary Financial Projections
Financialprojections provide the estimates of the revenues and organizationsforesee to incur in a given fiscal year. Initial projections arecollected before the actual budget plans are drawn up. Typically, theestimates help the organizations to assess budget deficits anddevelop funding proposals (Nguyen, Hogan, Lawson, Gooday et.al,2013). The paper will discuss, the importance of projections inguiding an organization budget and challenges in raising capital
HowProjections Guide Funding Assessment of an Organization
The projectionshelp an organization to evaluate the feasibility of a fundingopportunity. For example, managers can assess whether the expectedrevenue stream from the venture will support the growth of thecompany. If for example, a country wishes to invest in public roadsexpansions to improve the ease of movement of goods and services. Theproject should show estimates of expected revenues in the form oftaxes (Nguyen, Hogan, Lawson, Gooday et.al, 2013). Furthermore, suchassessment help a company determine whether the new opportunities arein line with the strategic vision. For instance, European countriesare shifting their energy to green sources (the wind, solar andhydro). The strategic plan of these countries is to cut carbonemission to zero. The current programs fall within their vision.
Howto Face Challenges in Raising Capital
If capital israised from investors, one must convince them that the business makessense and they will reap returns. The risk of the investors notfalling for the idea is high. The best approach is to do thoroughmarket research (Nguyen, Hogan, Lawson, Gooday et.al, 2013). Ensurethe said product serves a particular niche in the market and haspotential to grow. Notably, align the idea with the interests of thereasonable investor. Importantly, one should be ready to acceptrejection, the possibility that the idea may not succeed.
In conclusion,financial forecasting is essential in budgeting. Organizationsprepare budgets outlining the key priority areas. Forecasting helpsidentify risks and aid in developing mitigation measures.
Nguyen, N., Hogan, L., Lawson, K., Gooday, P., Green, R.,Harris-Adams, K., & Mallawaarachchi, T. (2013). Infrastructureand Australia`s food industry: Preliminary economic assessment.Australian Bureau of Agricultural and Resource Economics and Sciences, report, 13.
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