Welcome To Startup Students

I haven’t talked too much about financials, and I don’t really plan on doing so today.  I would, however, like to wet your taste buds with some tips on forecasting.  Remember, forecasting is in all reality BS.  Projections can only take you so far but they do help you when setting goals for your small business.

• You are better off selling yourself short than throwing out unrealistic numbers.  Be factual and conservative with your estimates.
• You arent going to go from making $10,000 to $10 million.  It just isnt going to happen unless something truly astonishing happens in your business or your market.
• Quantify your projections and dont just pull them out of a hat.  Make clear and concise assumptions.
• Back those assumptions up with a written list of your reasoning.  Pro forma financials will take your far.
• Utilize industry specific data and not just general data such as census publications.  Contact your local or university library for assistance in tracking down this type of information.  For those of you in school or who are stupid rich – try IbisWorld.
• This goes back to the above statements, but it’s important.  Your projections are going to be suspect if your sales or profit margins are higher (or lower) than the industry average.
• As you progress, compare your forecasts to actual results and determine what went wrong (or right!).

Yes, this was a bit “schoolish” but you are Startup Students!  Class dismissed.