The Art of Financial Projections - Filling the Money Jar

Tuesday, April 27, 2010 by Janet Monroe
venture capital law firms, Indiana entrepreneurial lawWorking in the area of Indiana entrepreneurial law, I see dozens of business plans that are incorporated into the equity raise documents of budding new companies.

With those business plans are financial projections that are based on newly formed companies with limited operating histories, unproven track records, and often times plans for entry into a mature and highly competitive marketplace.

Needless to say, it can be daunting as an entrepreneur to come up with a compelling reason why investors should look twice at you and your idea.

In my experience guiding clients through this area of federal securities regulations and Indiana entrepreneurial law, I agree that there is an art to financial projections.  Take it from Guy Kawasaki, the author of the Art of the Start, who wrote a chapter in his book Reality Check: The Art of Financial Projections.  He suggests the following ten pointers:
  1. Underpromise and overdeliver
  2. Forecast from the bottom up
  3. Don't go beyond 12 to 18 months
  4. Reforecast every three months
  5. Don't let costs get in front of revenue
  6. Collaborate with your investors
  7. Think in terms of per-unit profitability
  8. Plan for marketing costs
  9. Create a one-page report and stick to it
  10. Never miss a cost projection
These bullet points are great to consider and some of the factors I keep in mind as I work with clients and their equity raises under Indiana entrepreneurial law.  If you haven't read a book by Guy Kawasaki, you might want to consider it if you're an entrepreneur and seeking some guidance as a start-up company.

Comments for The Art of Financial Projections - Filling the Money Jar

Leave a comment





Captcha