Simple Pro forma Forecast FAQ: What you need to know

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It’s Friday afternoon. Your CFO just dropped a bomb: cash runway is low, and investors want a fresh forecast by Monday. You don’t have time for a 30-sheet model. You need a pro forma forecast: a clear, forward-looking projection built in minutes.

Let’s unpack what that means, why it matters, and how Runway delivers it exactly when you need it.

What is a pro forma forecast?

A pro forma forecast is a forward-looking financial projection that covers income, cash flow, and balance sheet. It’s based on assumptions, not past results. It’s built to answer questions, not fill in numbers.

Simple vs. Detailed pro forma forecasts:

  • Simple: 2-4 key drivers tied to your main levers, high-level view
  • Detailed: multi-sheet, line-by-line modeling of every account

They're perfect when you need fast, directional answers: for new initiatives, board updates, or quick scenario checks. Financial Edge outlines the four key building blocks of any forecast: historical inputs, ratio building, assumption setting, and projection generation, ensuring consistency across simple and detailed models.

The goal is clarity and speed: giving you enough information to make informed decisions without getting lost in details.

Why use a simple forecast?

Simple forecasts shine when time is short and clarity matters:

  • When you need rapid budgeting insights
  • For testing multiple scenarios (best/worst case planning)
  • When communicating financial projections to stakeholders
  • During high-uncertainty periods when detailed forecasts might be misleading

Simple pro forma forecasts are ideal for quick scenario planning. You can simulate best- and worst-case outcomes in minutes. They’re also the fastest way for a small, scrappy finance team to turn "we might be in trouble" into a concrete set of options.

They're particularly valuable when:

  • You have limited historical data, as with startups or product lines. 818 Tequila used simple forecasting during their hypergrowth phase.
  • You need to make quick decisions. As Superhuman discovered, simple forecasting can improve decision-making efficiency by 50-100x compared to complex spreadsheet models.
  • Your team is small and lacks dedicated financial analysts. Simple forecasts don't require specialized financial modeling expertise.

Applications of a pro forma forecast

Pro forma statements allow you to visualize the impact of major business decisions before they happen. They bridge the gap between your current data and a future reality that includes significant changes.

Here are some situations when you may use these forecasts:

  • Mergers and acquisitions: Combining two companies gets messy. You use pro forma statements to consolidate financials and identify synergies or risks before signing the deal.
  • Fundraising rounds: Investors buy your future potential. A pro forma model demonstrates how capital injections fuel growth and impact your burn rate over the next 12 to 24 months.
  • Internal strategic planning: You need to test decisions before making them. Whether launching a product or changing pricing, pro forma forecasts show how these shifts ripple through your income statement.
  • Debt financing: Lenders require proof of repayment. You use pro forma projections to show banks that your future cash flows can support debt service and maintain leverage ratios.

How to build one in Runway (in minutes)

Runway turns a simple pro forma build into ROI. Here is how to get set up quickly:

  1. Set up your historical P&L
    Connect your accounting system (NetSuite, QBO, Xero) to import GL data alongside transaction dates and vendor details. Map those GL accounts to reporting categories to create a clean hierarchy. This establishes the "actuals" foundation for your P&L.
  2. Create a P&L model
    Create a new model to house your pro forma forecast. Each row serves as a driver for a specific P&L line. Add drivers that pull in your rolled-up historical actuals, then create corresponding drivers to hold your forward-looking pro forma values.
  3. Define forecast logic with formulas that separate actuals from assumptions
    Use date access functions like thisMonth() and lastClose() to split actuals from forecast months automatically. An IF statement switches the view from historical data to your projected assumptions based on the current date, so the model owner never has to manually shift columns as time moves on.
  4. Build assumption drivers
    Create specific drivers for variables like "starting MRR," "churn rate," or "opex growth." Reference these in your pro forma formulas so you can adjust global assumptions and interpret the impact instantly, and so a single driver change updates every scenario.
  5. Aggregate and visualize
    Calculate key metrics like gross profit and operating income using simple math operators. Display the final pro forma P&L on a Runway Page or driver table to visualize the results or compare different scenarios side-by-side, and share that Page with leadership for live, in-model reviews.

Tixel reduced their model build time from days to just 30 minutes using Runway's forecasting tools.

What should the forecast include?

A robust pro forma forecast models your financial future based on specific "what-if" scenarios. It connects your strategic goals to the nuts and bolts of your P&L, balance sheet, and cash flow statement. To serve the finance team effectively, your model needs to go deeper than top-line guesses. In Runway, that usually means a set of connected drivers and tables that roll up into Pages for revenue, costs, headcount, and cash.

A comprehensive pro forma forecast includes:

  • Detailed revenue drivers. Build your revenue projections using a bottom-up approach. Focus on volume multiplying price, customer acquisition costs, and distinct revenue streams. If you are in SaaS, break this down by ARR, MRR, churn, and expansion revenue.
  • Cost of goods sold (COGS) and gross margin. Track the direct costs tied to production or service delivery to understand your unit economics. This allows you to analyze gross margin performance as you scale and identifies where efficiency improvements impact the bottom line.
  • Operating expenses (OpEx) and headcount. Categorize expenses into standard buckets like R&D, Sales & Marketing, and G&A. Since people are often your biggest expense, use a detailed personnel roster that accounts for salaries, benefits, and taxes alongside planned hiring dates.
  • EBITDA and cash flow reconciliation. Profit does not equal cash. You need to adjust your EBITDA for working capital changes, capital expenditures (CapEx), and debt service. This calculation is vital for understanding your true burn rate and runway.

When modeling your assumptions, focus on the variables that truly move the needle:

  • Historical versus industry benchmarks. Ground your growth rates in your actual historical performance first. If you lack history, use validated industry benchmarks rather than aspirational targets.
  • Working capital cycles. Account for the timing of cash movements. Adjust your days sales outstanding (DSO) and days payable outstanding (DPO) to reflect when cash actually leaves or enters the bank, not just when you book the invoice.
  • Seasonality and trends. Adjust both revenue and expenses for predictable fluctuations. This ensures your cash flow forecast handles low months without triggering a liquidity crunch.
  • Sensitivity and scenario analysis. Build base, best, and downside scenarios. Test sensitivity by varying key drivers like conversion rates or pricing by ±10%. This helps you understand variance risks and prepares the business for volatility.

Maintain clear documentation of each specific driver in your forecast.

Runway's collaborative planning features make building and testing these assumptions straightforward for every stakeholder who needs to weigh in.

Dos and Don'ts

Common pitfalls to avoid:

  • Over-detailing: Adding too many line items defeats the "simple" purpose
  • Static assumptions: Failing to update forecasts as new data arrives
  • Overestimating revenue: Being too optimistic with growth projections
  • Hiding logic: Burying key logic inside opaque formulas that only one person understands

Best practices to follow:

  • Keep assumptions transparent: Document every driver in Runway for auditability
  • Update regularly: Use Runway's reporting features to compare projections against actuals
  • Consider multiple scenarios: Develop different cases to account for uncertainty
  • Focus on key drivers: Identify the variables that truly impact your business

You need clarity. You need speed. You need context.

A simple pro forma forecast in Runway gives you exactly that, when you need it most.

Book a demo to see it in action.

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