What are financial projections primarily used for in a business?

Financial projections are primarily used for budgeting and planning within a business. This involves estimating future revenues, expenses, and cash flow, which helps in creating a financial roadmap for the organization. By having projections, businesses can allocate resources effectively, set realistic financial goals, and make informed decisions regarding investments and expenditures. It aids in anticipating potential financial challenges and opportunities, allowing for proactive management of finances.

Utilizing financial projections helps businesses ensure they are operating within their means while strategically planning for growth, hiring, and other operational needs in line with expected revenue. This aspect of financial management is crucial for maintaining the overall health and sustainability of the business.