How do I forecast revenue for a business plan?

Use your last 12 months of turnover as the base, pick the method that matches your pattern (regression for steady trends, seasonal for peaky trades), forecast 12–24 months, and include optimistic and pessimistic scenarios. Lenders specifically look for the assumptions behind the numbers, so state your growth rate and where it comes from.

What is the difference between a revenue forecast and a sales forecast?

In practice they are used interchangeably. Strictly, a sales forecast can be in units or value and often per product or per rep, while a revenue (turnover) forecast is the total money figure across the business. This tool forecasts the total value.

What is a revenue run rate?

Run rate annualises your current performance: average monthly revenue × 12. It is the simplest possible forecast — it assumes no growth and no seasonality — which makes it a useful conservative baseline, and it is how early-stage businesses commonly quote “annualised revenue”.

Should my turnover forecast include VAT?

No. Turnover is normally reported net of VAT, because the VAT you collect is owed to HMRC and never belongs to the business. Enter net figures in the forecaster; the exception is unregistered businesses, whose prices contain no VAT to strip out.

Which forecasting method is most accurate?

The one whose assumptions match your business. Regression and exponential smoothing usually beat naive methods when you have 12+ months of trending data; the seasonal method wins for retail, hospitality and tourism; run rate is the safest floor. Comparing two methods side by side — and treating the gap between them as your uncertainty — beats trusting any single number.

How many months of history do I need?

Straight-line and run rate work from a single month. Regression and exponential smoothing need at least 3, and become reliable from about 6. To capture seasonality properly you want a full 12 months, so each month’s index is grounded in a real observation.

Revenue Forecast Calculator – Free Turnover Forecasting Tool

Revenue forecasting explained: how to forecast your turnover accurately

A revenue forecast (often called a turnover forecast in the UK) is an estimate of the income your business will generate over a future period — usually the next 6, 12 or 24 months. Lenders ask for one in every business plan, HMRC expects sensible figures behind your VAT and Corporation Tax planning, and day to day it tells you when you can afford to hire, buy stock or take on premises.

This free forecaster goes further than the typical single-formula calculator: it fits six different forecasting methods to your actual monthly figures, models seasonality, draws optimistic and pessimistic scenario bands, and exports everything to CSV. Below is a complete guide to how each method works, a worked example in pounds, and the UK-specific details — fiscal years, VAT treatment and realistic growth rates — that generic tools ignore.

What counts as revenue (and what doesn’t)

Revenue — turnover in Companies House filings — is the total value of sales invoiced in a period, before any costs are deducted. It is not profit, and for VAT-registered businesses it is normally quoted net of VAT: the 20 % you collect on a standard-rated sale belongs to HMRC, so a £1,200 gross invoice contributes £1,000 to turnover. Keeping VAT out of your history is essential, otherwise every forecast method inflates your future income by a fifth.

Forecast in the same units you record: monthly invoiced sales for most service businesses, monthly till receipts (net of VAT) for retail. Twelve months of history is the sweet spot — enough for the regression and smoothing methods to find a trend, and enough to reveal a full seasonal cycle.

The six forecasting methods, in plain English

Straight-line growth — applies a fixed monthly growth rate to your latest month. Best when growth is steady and you have a clear target (e.g. “we grow about 3 % a month”).
Moving average — averages your last few months and rolls that forward. Best for stable businesses with noisy month-to-month figures.
Linear regression — fits a trend line through all your history mathematically (the same calculation as Excel’s FORECAST function) and extends it. Best when you have 6+ months of consistent trend.
Exponential smoothing — like a moving average, but recent months count for more, so it reacts faster when momentum shifts. Best when trading conditions changed recently.
Seasonal forecast — multiplies a growth path by monthly seasonal indices (retail Q4 peak, tourism summer peak). Best for any business whose December looks nothing like its February.
Run rate — holds your average month flat. Deliberately conservative; useful as a floor and for annualising a part-year’s trading (“annual run rate”).

Top-down vs bottom-up forecasting

The methods above are bottom-up: they build the forecast from your own trading data. The alternative, top-down, starts from the total market (“UK cafés turn over £5bn; we’ll take 0.001 %”) — quick, but notoriously optimistic and rarely taken seriously by lenders. Best practice for an established business is bottom-up from real history, sense-checked top-down against the size of your local market. For a pre-revenue start-up with no history, begin with the straight-line method: estimate a realistic first-month figure from capacity (covers × average spend, billable hours × day rate) and grow it from there.

Worked example: a 12-month forecast in pounds

Say your last month’s turnover was £10,000, your history shows roughly 3 % monthly growth, and you forecast 12 months ahead with the straight-line method:

Month 1: £10,000 × 1.03 = £10,300
Month 2: £10,300 × 1.03 = £10,609
Month 12: £10,000 × 1.03¹² ≈ £14,258
Total forecast turnover for the year ≈ £146,200
With a ±15 % scenario band, month 12 lands between roughly £12,100 (worst case) and £16,400 (best case) — plan costs against the worst case, ambitions against the best.

Realistic growth rates for UK small businesses

Most established UK SMEs grow revenue at low-to-mid single digits a year in real terms: retail typically 2–5 %, professional services 4–8 %, e-commerce and SaaS often 10–25 %+ while scaling. As a rule of thumb, a 3 % monthly growth rate — over 40 % a year compounded — is start-up-scale growth, not a safe planning assumption for a mature business. If your forecast needs double-digit monthly growth to work, the plan, not the calculator, is the problem.

UK specifics: fiscal years, VAT thresholds and MTD

Most UK companies run their financial year to 31 March (or align with the 6 April–5 April tax year if unincorporated), so the forecaster highlights April rows as fiscal-year starts — handy when your forecast feeds a business plan or Corporation Tax estimate.

Watch the VAT registration threshold (currently £90,000 of rolling 12-month taxable turnover): a growth forecast is precisely the tool that tells you when you will cross it, and registering late incurs penalties. Once registered, Making Tax Digital means your accounting software already holds the clean monthly net-of-VAT history this forecaster needs — export it and paste it in.

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Revenue Forecast Calculator