Once we have completed developing our realistic plans,…our achievable plans,…a good practice is to prepare a worst-case scenario.…We are all very positive about our companies,…our plans and our projects,of course.…Why is there a benefit to preparing for the worst?…For many reasons actually.…The first one is for us to identify…the key things that need to happen in our plan.…Most of the time, without necessarily realzing it,…our entire plan is dependent on a single event happening…or an objective that needs to be met…and without which all the rest can turn sour.…
To work on a worst-case scenario,…you have to identify those big dependencies…and just that will prepare you even better…for making sure you meet them.…Also, if those big dependencies…simply slip by a few months,…this will allow you to think in advance…about the difficult decisions you will have to make…and how you will find a way…to turn the situation around.…Sometimes, a slip in the realization…of a key dependency of your plan…will require you to prioritize further investments…
Author
Released
9/9/2014- Distinguish between forecasting and planning.
- Recall the pros and cons of bottom-up projection.
- Explain how a finance manager can utilize a sales pipeline in business projections.
- Describe how a company can forecast its gross margin by product.
- Identify the pros and cons of using top-down projection.
- Recognize how business plans utilize forecasts.
- Summarize how to develop a set of worst-case scenarios.
Skill Level Intermediate
Duration
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Excel 2013 Essential Training
with Dennis Taylor6h 32m Intermediate
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Introduction
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Welcome42s
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1. Financial Projection Basics
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Financial projections1m 34s
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2. Estimating Volumes, Price, and Revenue
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Revenue projection basics1m 46s
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Preparing past P&Ls3m 40s
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Market-driven forecasting2m 46s
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3. Estimating Cost of Production and Margin
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4. Estimating Operating Expenses
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Projecting fixed OPEX1m 55s
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Projecting variable OPEX1m 41s
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5. The Top-Down Approach
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The exit methodology2m 15s
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6. Setting Up Targets
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Moving from forecast to plan2m 10s
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Conclusion
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Next steps1m 10s
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Video: Developing worst-case scenarios