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Originally Posted by mtmob |  | | | | | | | | | I have a question and forgive my ignorance please help me understand how one would know what he or she would be making in the next three years? | |  | |  | |
Thats actually a very good question. For the most part, these numbers are really estimates. There really is no way to predict the exact numbers - and if you could you'd have wall street on its knees.
Most companies hire financial analysis and advisors that can do these estimates for them. But say your on a tight budget or simply don't have time currently. You can run some estimates off you head, of course if you were to pay for a professional, your estimates would be more accurate.
For example, for your first year you would figure out how much you would need to start up your business. You would also factor in other costs, i.e. transportation, employees, legal fees etc.
now you would factor in your estimated sales as well and subtract your costs from your sales. That will give you some numbers for your profits. This is of course a very rough sketch of your finances, but if you only had 5 minutes to do this then that is what you would do roughly.
However, I STRONGLY encourage that you spend lots of time on that, since it is a key factor in determining a business that survives and one that dies. This also determines whether or not your budget will work, and how many sales you must make to break even and actually start profiting.