How to Forecast Revenue, Profit and Cash Without Guessing

Introduction - How to Forecast Revenue, Profit and Cash

In construction and engineering, guessing the numbers is risky business. Too often, directors make decisions based on gut feel, assuming revenue will rise because more tenders are out, or believing profits will follow because projects look “busy.” The problem is simple: without proper forecasting, what looks like growth can quickly turn into cash flow strain, missed payments, and pressure from the bank.

At Jones Financial Accounts (JFA), we help SMEs move beyond guesswork. Forecasting revenue, profit, and cash flow gives leadership teams a clear view of the road ahead. Instead of reacting to surprises, you plan for them. Forecasts don’t just protect your business, they create confidence with staff, suppliers, and even lenders.

This blog breaks down the three key forecasts every construction and engineering SME should use, revenue, profit, and cash, and how CFO-level thinking turns numbers into a reliable plan for growth.

Revenue Forecasting: More Than Just Sales Hopes

Revenue forecasting predicts how much money will come into the business over the coming months or year. It’s based on your pipeline , contracts won, contracts in progress, and realistic assumptions about future tenders. Proper revenue forecasts use data, not optimism.

All SMEs should forecast revenue, but it’s especially vital for construction firms that rely on stage payments or engineering companies juggling multiple client contracts.

A £1m-turnover groundworks firm was bidding aggressively and expected £2m turnover the following year. JFA built a revenue forecast, we showed that only 60% of tendered contracts typically converted. Adjusting expectations to £1.4m gave a realistic picture and allowed leadership to plan staffing and materials accordingly.

Many directors think forecasting revenue is just “adding up potential sales.” In reality, CFO-level forecasting factors in win rates, contract timing, and seasonal demand. Guessing inflates expectations, forecasting keeps them grounded.

Profit Forecasting: Knowing What’s Left After Costs

Profit forecasting takes your revenue forecast and layers on costs: direct labour, materials, subcontractors, and overheads. It shows not just what you expect to earn, but what you expect to keep. This is where many SMEs get caught out, growing revenue but seeing profits fall.

SMEs over £500k turnover benefit most. In construction, rising material costs and labour inefficiencies can erode margins. Profit forecasting ensures these risks are visible before they hurt the bottom line.

A £2.5m-turnover engineering firm forecasted £500k profit on new contracts. But when overheads (office staff, vehicles, software) were factored in, the true forecasted profit was £280k. This clarity led to repricing some services and renegotiating supplier terms, preserving margins.

Some directors assume “if revenue grows, profit grows.” That’s rarely true. Without profit forecasting, businesses risk chasing turnover while margins quietly disappear.

Cash Flow Forecasting: The Lifeline of the Business

Cash flow forecasting predicts the timing of money in and out. It highlights when you’ll get paid, when suppliers need paying, and whether gaps exist. In construction, this matters more than anything, as delays in stage payments or retentions can create cash shortages even in profitable businesses.

Essential for all SMEs, but non-negotiable for firms with contracts involving stage payments, retentions, or heavy upfront material costs.

A £3m-turnover civil engineering business showed £400k profit on paper but couldn’t pay suppliers on time. A 13-week cash flow forecast built by JFA revealed the gap was caused by late stage payments. By renegotiating terms and arranging a short-term facility, they avoided insolvency and protected supplier trust.

Many owners confuse profit with cash, believing “if we’re making money, we’ll have money.” The reality is, timing differences kill businesses, cash forecasting prevents that.

Key Takeaways

• Revenue forecasting sets realistic growth targets based on data, not guesswork.

• Profit forecasting reveals what’s left after costs, protecting margins from erosion.

• Cash flow forecasting highlights timing gaps that profit statements often hide.

• Construction and engineering SMEs rely on forecasting to manage contracts, stage payments, and retentions.

• Forecasting isn’t complicated, with the right tools, it provides clarity and confidence.

If you’re still relying on gut feel to plan the future, it’s time to upgrade to CFO-level forecasting. At JFA, we help construction and engineering SMEs build accurate revenue, profit, and cash forecasts, turning uncertainty into clarity.

Wrapping up today's insights, tomorrow we simplify another accounting challenge