financial-forecasting

What this skill does

# Financial Forecasting

You create financial forecasts projecting future financial performance. You research market benchmarks and comparable company data yourself — do not ask the user for data they would need to look up. Only ask the user for decisions and confirmations.

This skill complements `cost-benefit-analysis` (which evaluates specific decisions) and `roi-modeling` (which calculates returns) by projecting the **overall financial trajectory** of a business or project.

## Forecasting Methods

| Method | Approach | Best for |
|---|---|---|
| **Straight-line** | Constant growth rate projection | Mature, stable businesses |
| **Growth rate** | Linear, exponential, or S-curve | Growth-stage businesses |
| **Driver-based** | Key drivers → financial outcomes | Complex businesses with clear operational metrics |
| **Bottom-up** | Units × price, customers × ARPU | Businesses with known unit economics |
| **Top-down** | Market size × market share | Early-stage or market entry |
| **Hybrid** | Bottom-up + top-down triangulation | Most accurate for established businesses |

## Phase 1 — Setup

### Input handling

Follow shared foundation §7 — interview mode. When input is missing or insufficient, interview to gather at minimum:

| Dimension | Required | Default |
|---|---|---|
| **Business/project context** | Yes | — |
| **Historical financial data** | No | Will use research + benchmarks |
| **Business model** | No | Inferred from context |
| **Time horizon** | No | 3 years |
| **Granularity** | No | Monthly Y1, quarterly Y2-3 |
| **Key drivers** | No | Will be identified |

**Exit interview when**: Business context is clear enough to identify revenue model, cost structure, and key drivers.

### 1. Collect input

Accept one of:
- A business or project description
- A file path to historical financial data or existing forecasts
- Pasted financial data or business case content
- No input or vague input → enter interview mode

### 2. Detect scope

From the input, identify:
- **Business**: What the business or project is
- **Revenue model**: How it makes money (subscription, transactional, marketplace, etc.)
- **Stage**: Pre-revenue / early / growth / mature
- **Data availability**: Historical data provided or research-based
- **Time horizon**: Forecast period (default: 3 years)
- **Granularity**: Monthly Y1, quarterly Y2-3 (adjustable)

### 3. Confirm scope

```
**Business**: [name]
**Revenue model**: [type]
**Stage**: [pre-revenue / early / growth / mature]
**Data source**: [historical data / research-based]
**Time horizon**: [N years]
**Granularity**: [monthly Y1, quarterly Y2-3]
```

Ask the user to confirm or adjust. Ask diagram render mode and output path per the `diagram-rendering` and `autonomous-research` mixins.

## Phase 2 — Research

Use WebSearch and WebFetch per the `autonomous-research` mixin.

### 2a. Industry benchmarks

- Gross margins, operating margins, net margins for the industry
- Revenue growth rates for comparable companies
- Cost structure benchmarks (COGS %, OpEx % of revenue)
- Industry-specific ratios and KPIs

### 2b. Comparable company data

- Public company financials in the same space
- Startup benchmarks (if early-stage): typical burn rates, funding milestones
- Unit economics benchmarks: CAC, LTV, churn rates for the industry

### 2c. Market context

- Market growth rates and trends
- Pricing benchmarks
- Seasonal patterns (if applicable)

## Phase 3 — Business Model Analysis

### Revenue model identification

| Model | Revenue formula | Key drivers |
|---|---|---|
| **Subscription/SaaS** | Customers × ARPU; MRR/ARR with churn | New sales, expansion, contraction, churn rate |
| **Transactional** | Transactions × average order value | Traffic, conversion rate, AOV |
| **Marketplace** | GMV × take rate | Buyers, sellers, GMV, take rate |
| **Licensing** | Licenses × price; maintenance/support | New licenses, renewals, support contracts |
| **Services** | Consultants × utilization × rate | Headcount, utilization rate, bill rate |
| **Freemium** | Free users × conversion rate × ARPU | User base, conversion, monetization |

### Cost structure mapping

| Category | Type | Driver |
|---|---|---|
| **COGS** | Variable | Per unit or % of revenue |
| **Salaries** | Fixed (stepped) | Headcount × avg salary; hiring plan |
| **Marketing** | Semi-variable | Budget + % of revenue |
| **Infrastructure** | Semi-variable | Base + per-user/per-transaction scaling |
| **Rent/office** | Fixed | Lease terms, escalation |
| **R&D** | Fixed (stepped) | Engineering headcount |

### Key driver identification

Identify 3-7 operational metrics that drive financial outcomes. Examples:
- Website visitors → conversion rate → customers → ARPU → revenue
- Sales team size → demos/month → close rate → new ARR
- Market size → market share → addressable revenue

Present business model summary for user confirmation.

## Phase 4 — Revenue Forecast

### Method selection

Choose based on data availability and business stage:
- Pre-revenue: top-down or assumption-based bottom-up
- Early stage with some data: bottom-up + growth rate
- Established with history: driver-based or hybrid

### SaaS/Subscription revenue model

| Component | Calculation | Period |
|---|---|---|
| **Beginning MRR** | Previous period ending MRR | Monthly |
| **+ New MRR** | New customers × ARPU | Monthly |
| **+ Expansion MRR** | Upsells, upgrades | Monthly |
| **- Contraction MRR** | Downgrades | Monthly |
| **- Churned MRR** | Lost customers × their ARPU | Monthly |
| **= Ending MRR** | Sum | Monthly |
| **ARR** | Ending MRR × 12 | Annual |

### Revenue table

| Period | [Segment 1] | [Segment 2] | Total Revenue | Growth % |
|---|---|---|---|---|
| M1 | [amount] | [amount] | [total] | — |
| M2 | [amount] | [amount] | [total] | [%] |

Monthly for Year 1, quarterly for Years 2-3 (or as specified).

## Phase 5 — Expense Forecast

### Fixed costs

| Item | Monthly | Annual | Escalation | Notes |
|---|---|---|---|---|
| [item] | [amount] | [amount] | [% per year] | [justification] |

### Variable costs

| Item | Unit cost | Driver | Formula | Notes |
|---|---|---|---|---|
| [item] | [amount] | [metric] | [unit cost × driver] | [justification] |

### Semi-variable costs

| Item | Fixed base | Variable component | Formula | Notes |
|---|---|---|---|---|
| [item] | [amount] | [rate × driver] | [base + variable] | [justification] |

### Headcount plan (if applicable)

| Role | Start | Hires Q1 | Q2 | Q3 | Q4 | Y2 | Y3 | Salary |
|---|---|---|---|---|---|---|---|---|

### Total expense table

| Period | COGS | Salaries | Marketing | Infrastructure | Other OpEx | Total |
|---|---|---|---|---|---|---|

## Phase 6 — P&L Projection

| Line item | Y1 | Y2 | Y3 | Benchmark |
|---|---|---|---|---|
| **Revenue** | [amount] | [amount] | [amount] | — |
| **COGS** | [amount] | [amount] | [amount] | [% of rev] |
| **Gross Profit** | [amount] | [amount] | [amount] | — |
| **Gross Margin %** | [%] | [%] | [%] | [industry %] |
| **Operating Expenses** | [amount] | [amount] | [amount] | — |
| **EBIT** | [amount] | [amount] | [amount] | — |
| **Operating Margin %** | [%] | [%] | [%] | [industry %] |
| **Interest & Tax** | [amount] | [amount] | [amount] | — |
| **Net Income** | [amount] | [amount] | [amount] | — |
| **Net Margin %** | [%] | [%] | [%] | [industry %] |

Flag margins that deviate significantly from industry benchmarks.

## Phase 7 — Cash Flow Forecast

### Operating cash flow

| Item | Y1 | Y2 | Y3 |
|---|---|---|---|
| Net Income | [amount] | [amount] | [amount] |
| + Depreciation/Amortization | [amount] | [amount] | [amount] |
| + Working capital changes | [amount] | [amount] | [amount] |
| **Operating Cash Flow** | [amount] | [amount] | [amount] |

### Investing cash flow

| Item | Y1 | Y2 | Y3 |
|---|---|---|---|
| Capital expenditure | [amount] | [amount] | [amount] |
| **Investing Cash Flow** | [amount] | [amount] | [amount] |

### Financing cash flow

| Item | Y1 | Y2 | Y3 |
|---|---|---|---