Most agency founders don't forecast because they think it's complicated, time-consuming, or pointless ("things always change anyway"). But here's the truth: forecasting isn't about predicting the future perfectly, it's about making better decisions today.
The Rolling 12-Month Framework
Why Forecasting Matters
Without a forecast, you're flying blind. You can't answer basic questions like:
A good forecast gives you the confidence to make these decisions and the early warning system to avoid disasters.
The Rolling 12-Month Forecast
The best forecasting framework for agencies is a rolling 12-month model. Here's how it works:
How Rolling Forecasts Work
What to Include in Your Forecast
Keep it simple. You need three main sections:
| Section | What to Include | Difficulty |
|---|---|---|
| 1. Revenue |
| Start here |
| 2. Costs |
| Mostly fixed |
| 3. Cash Flow |
| Critical |
How to Build Your First Forecast
Start simple. Here's a step-by-step approach:
Common Forecasting Mistakes
Avoid These Pitfalls
Assume 70-80% of your pipeline will close, not 100%
Revenue and cash are not the same thing
A forecast is only useful if it's current
Start simple and add detail as you go
Using Your Forecast to Make Decisions
Can you afford a new team member in Q2? Your forecast tells you.
Will you have enough cash to cover a slow month? See it coming.
What revenue do you need to hit your profit goals? Work backwards.
What if you lose a big client or win a major project? Model it.
Your Forecasting Action Checklist
The Bottom Line
Forecasting doesn't have to be complicated. Start with a simple 12-month model, update it monthly, and use it to guide your decisions. The confidence and clarity it provides are worth the effort.
Want to learn more about agency financial management? Explore which key metrics to track monthly, the most common cash flow mistake to avoid, and when to hire a finance partner.
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