Why might trend analysis not be suitable for new revenue sources?

Trend analysis is a method used to evaluate data over a period to identify patterns or trends that might inform future projections. It typically relies on historical data to predict future outcomes. When it comes to new revenue sources, trend analysis may not be suitable because there is often insufficient historical data available to establish reliable trends. Without a substantial amount of past data, determining patterns or making accurate predictions about future revenues becomes challenging.

In the case of new revenue sources, there might be variability in factors influencing those revenues, such as market conditions, demand, or regulatory changes. Since the technique is grounded in historical performance metrics, the lack of a historical data foundation for new revenue sources makes it difficult to apply trend analysis effectively. Consequently, organizations may need to utilize alternative forecasting methods that consider market research or expert opinions when assessing new revenue streams.