Join Rudolph Rosenberg for an in-depth discussion in this video Explaining the top-down approach, part of Making Business Projections.
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…The top-down approach is tackling the same problem but…from a completely different angle.…It is a much simpler and less detailed.…In the previous chapter,…we went through a lot of detail down to individual transactions with…the objective of including anything we know is happening in the company.…With the second approach,…it is more like an astronaut's view of the piano, focusing only on the big picture.…And as I explain at the beginning of the course,…the second approach is not one you can use on its own.…
As it's a way to high level.…It is helpful though as an extra point of view the two will combine with our…bottom-up approach.…So again, why is there any added value in looking at the P&L…from a very high level standpoint?…Simply because when working in a decent way,…we focus solely on the things we believe will happen.…For example, we include only the exceptional elements that we know will be…happening and expenditures that make sense with regards to the plan we have laid out.…There is one thing we never count in the bottom-up approach though and…
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- Forecasting vs. planning
- Dealing with exceptional elements
- Projecting revenue
- Adjusting for changes and seasonality
- Creating product-level projections
- Estimating costs and operating expenses
- Projecting gross margin
- Setting up targets and goals
- Developing worst-case scenarios<br><br>
- The PMI Registered Education Provider logo is a registered mark of the Project Management Institute, Inc.