# How to Create a Monthly Revenue Forecasting System
Running a business in Brisbane—whether you’re a tradie in Chermside or a boutique agency in Newstead—often feels like trying to predict the weather. One minute it’s clear skies, and the next, a classic QLD afternoon storm rolls in. A monthly revenue forecasting system is your meteorological station; it helps you see those storms coming and, more importantly, tells you when it’s safe to invest in growth.
Without a forecast, you’re making decisions based on your bank balance today, which is a bit like driving a car while only looking at the rearview mirror. This guide will walk you through building a robust, predictable system to see exactly what’s coming over the horizon.
Why This Matters for Your Business
Most small business owners rely on 'gut feel'. While your intuition is valuable, it doesn’t help when you’re deciding whether to hire a new staff member or invest in a $10k marketing campaign. A forecast gives you the confidence to say "Yes" to growth or "Not yet" to unnecessary risk.---
Prerequisites: What You’ll Need
Before we dive into the spreadsheet magic, make sure you have the following ready:
- Access to your accounting software: (Xero, MYOB, or QuickBooks). Xero is the gold standard here in Australia, and we’ll be referencing it often.
- Historical Data: At least 12 months of past revenue data (if you’re a startup, use what you have, but be prepared for lower accuracy).
- Your Sales Pipeline: A list of current leads or quotes you’ve sent out.
- A Spreadsheet Tool: Google Sheets is my recommendation because it syncs beautifully, but Excel works just fine.
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Step 1: Clean Up Your Historical Data
You can't predict the future if the past is a mess. The first thing we need to do is pull your revenue from the last 12 to 24 months.
Log into Xero, go to Reports > Profit and Loss, and set the date range for the last financial year.
Pro Tip from Experience: Make sure you are looking at 'Accrual' basis, not 'Cash'. Why? Because accrual shows when you actually earned the money (invoiced), whereas cash only shows when the client finally got around to paying you. For forecasting, we want to know when the work happens. What you should see: A list of months across the top and your various revenue accounts (e.g., "Service Income," "Product Sales") down the side. Export this to a CSV file.Step 2: Categorise Your Revenue Streams
Not all revenue is created equal. To build a system that actually works, we need to split your income into three buckets:
- Recurring Revenue: Retainers, subscriptions, or ongoing maintenance contracts. This is your "sleep easy" money.
- Project/One-off Revenue: New builds, one-time consultations, or equipment sales.
- Expansion Revenue: Upselling existing clients into more expensive packages.
Step 3: Set Up Your Master Spreadsheet
Open a new Google Sheet. This is going to be your "Source of Truth."
- Column A: Revenue Categories (the buckets we just identified).
- Columns B through M: The next 12 months (e.g., July 2024, August 2024, etc.).
Step 4: Calculate Your 'Baseline' (The Floor)
Start with your recurring revenue. If you have 10 clients paying you $1,000 a month on a 12-month contract, your baseline is $10,000.
Don't forget to account for Churn Rate. In Australia, the average small business loses about 5-10% of its customers annually. Be honest with yourself here. If you usually lose one client every three months, build that into the spreadsheet as a negative line item.
Step 5: Map Your Sales Pipeline (The Weighted Forecast)
This is where most people get stuck, and honestly, the interface of most CRMs doesn't help. We need to look at the quotes you have out in the world and apply a 'Probability' to them.
The Logic: If you have a quote out for $10,000 and you think there’s a 50% chance they’ll sign, you don't forecast $10,000. You forecast $5,000.- Hot Lead (80%): They’ve said yes verbally; we’re just waiting on the paperwork.
- Warm Lead (50%): We’ve had a great meeting and sent a proposal.
- Cold Lead (10%): They enquired on the website but haven't replied to our follow-up.
Step 6: Account for Seasonality (The 'Brisbane Factor')
Every industry has a rhythm. If you’re a tradie, you’re likely slammed in November/December as everyone wants jobs done before Christmas, but January might be dead quiet. If you’re in retail, EOFY (June) and Black Friday (November) are your peaks.
Look at your data from Step 1. Do you see a 20% dip every April because of the school holidays and Easter? Adjust your forecast manually for those months. Don't just drag a formula across the page; it will lie to you.
Step 7: The 'Wait, What About Expenses?' Check
Technically, this is a revenue forecast, but revenue without context is dangerous. As your revenue grows, your Cost of Goods Sold (COGS) usually grows too.
(Skip this if you’re a sole trader with almost no overheads, but for anyone with staff, this is vital.)
If you forecast a massive spike in sales in September, do you have the staff to deliver it? If not, you’ll need to add a "Hiring" expense in August. A good revenue system highlights where your capacity bottlenecks are.
Step 8: Build Three Scenarios (Conservative, Expected, Aggressive)
I always tell our clients at Local Marketing Group: "Plan for the worst, hope for the best, but build for the middle."
Create three versions of your forecast:
- Conservative: Only includes signed contracts and 'Hot' leads. (Use this for tax planning).
- Expected: The most likely outcome based on your current marketing activity.
- Aggressive: What happens if that big government tender actually lands? (Use this for dreaming and long-term strategy).
Step 9: The Monthly Review Ritual
This is the most important step. A forecast is a living document, not a "set and forget" thing.
On the 5th of every month (once your Xero is reconciled for the previous month), sit down with a coffee and:
- Replace last month's "Forecast" numbers with the "Actual" numbers.
- See where you over or under-performed.
- Adjust the next 11 months based on what you learned.
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Troubleshooting Common Issues
"My revenue is completely random!" If you don't have recurring revenue, look at your 'Lead Velocity'. How many enquiries do you get a month? If you get 20 enquiries and close 5, and your average job is $2k, your "Expected" revenue is $10k. It’s not perfect, but it’s a start. "I forgot to exclude GST!" This is a classic Aussie mistake. Always forecast in 'Net' amounts. If you include GST, you’ll think you have 10% more money than you actually do, and the ATO will eventually come knocking for their share. "The spreadsheet is getting too complex." Keep it simple. If you have 50 different products, don't list them all. Group them into 3 or 4 main categories. You’re looking for the big picture, not counting cents.---
Pro Tips from the Trenches
- The 'Lumpy' Client Rule: If one client makes up more than 30% of your revenue, create a specific "Risk" line in your forecast. What happens to your business if they leave tomorrow?
- Marketing Correlation: If you spend $1,000 on Google Ads in Brisbane, how much revenue does that typically generate 2 months later? Start tracking this 'lag time' to make your forecast even more accurate.
Next Steps
Now that you have a forecast, you might realise you need more leads to hit your targets. That’s where we come in.
If you’d like us to look over your marketing strategy to help make those "Aggressive" scenario numbers a reality, feel free to reach out. We love helping Brisbane businesses scale with predictable systems.
Contact Local Marketing Group to chat about your growth goals. Related Guides:- How to Track Marketing ROI in Xero
- Setting Up a CRM for Australian Small Businesses
- Understanding Your Customer Acquisition Cost (CAC)