Vinu: Manu, I need to prepare financial projections for my business, but I don’t want to make unrealistic numbers. How should I approach this?

Manu: Good approach, Vinu. Projections should be practical, not optimistic. Start with your past performance.

Vinu: So I should look at last year’s numbers?

Manu: Exactly.

If last year’s sales were ₹60 lakh, don’t jump to ₹1.5 crore without a clear reason. Base your growth on capacity, demand, and market conditions.

Manu: Break it down.

If you sell 1,000 units per month at ₹1,500, your monthly sales are ₹15 lakh.

Now ask—can you realistically sell 1,200 units? If yes, projected sales become ₹18 lakh.

Manu: Link them to sales.

Variable costs will increase proportionately, while fixed costs like rent ₹80,000 may stay constant or increase slightly.

Vinu: Should I include loan repayments?

Manu: Definitely.

Vinu: Many projections show high profits. Is that okay?

Manu: Only if backed by logic.

If projected profit jumps from ₹5 lakh to ₹20 lakh, you must justify how—better pricing, lower costs, or higher volume.

Manu: Prepare three scenarios—

Best case, realistic case, and worst case.

Focus your planning on the realistic one.

Vinu: What’s the biggest mistake entrepreneurs make?

Manu: Overestimating sales and underestimating costs. That creates false confidence.

Vinu: One practical check before finalising projections?

Manu: Ask—

“Can my business operations actually deliver these numbers?”

Vinu: Final takeaway?

Manu: Good projections don’t impress others—they help you take better financial decisions and avoid future surprises.

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