How to Write Financial Projections That Hold Up

Updated July 2026 · Lightbizhub

Projections are not predictions. They are a model showing what happens if your stated assumptions hold, and the assumptions are what get examined.

Start from capacity, not ambition

Work out what your business can physically deliver. Units per month, multiplied by price, gives your ceiling. Every revenue line must sit under it, or you must explain what raises the ceiling.

State every assumption

Assumption	Must be based on
Average price	What you actually charge
Volume per month	Capacity, not target
Cost of sales percentage	Real supplier pricing
Fixed monthly costs	Rent, wages, overheads as they are
Growth rate	Something defensible, not a wish

An assessor who can see your assumptions can accept your conclusion. One who cannot has to assume the worst.

Build three statements

• Income statement — revenue, cost of sales, gross profit, expenses, net profit
• Cashflow — when money actually moves, including debtor delays
• Break-even — fixed costs divided by gross margin

They must agree with each other. A profit figure in one that does not flow into the other is the fastest way to lose credibility.

Model the ramp

Businesses do not hit full capacity in month one. Show the build-up, and be honest about how long it takes. A realistic ramp is more persuasive than an instant peak.

Show the loss if there is one

Early losses are normal. Hiding them by inflating revenue is not. A plan that shows month one to five at a loss, then break-even, is credible. One that shows profit from day one usually is not.

Sense-check before you submit

• Does revenue ever exceed capacity?
• Does gross margin match your cost structure?
• Do owner drawings leave room for repayment?
• Does the closing cash balance ever go negative?
• Does break-even revenue appear achievable?

General information, not financial advice. Funder criteria and products change. Confirm current requirements directly with the institution.