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.COM


The Entrepreneur’s Cure
   For Financephobia
What Are Financial Projections?
                               Sales        Expenses




Many entrepreneurs don’t understa...
Your Vision/Idea
                       Expressed as $$$
You see, financial projections are your idea expressed as money! I...
Your                               Financial
                                       Planning
    Vision                   ...
Focus

In order to do this, it’s extremely important for you to have a clear vision. So, focus focus
focus.

Picture: http...
Add
                        Subtract
                        Multiply
                         Divide
You already know all...
Do your research




Do your research. Don’t take your assumptions from thin air. Read annual reports of similar
public/li...
Your Sales Assumptions
                           Example: Website Sales

   Traffic Estimator

                           ...
Your Expense Assumptions


        Pick up the phone                                 Go online




                       ...
Use a Spreadsheet


                         (It’s free)



                                                              ...
Sample Financial Projections and
              “How to Guide”




     Download Sample Financial Projections and “How
    ...
Income                        Cash Flow                     Balance Sheet


                                              ...
Stress Test Your Financial Projections




                                    ?
                       Put on your invest...
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Entrepreneur's Cure To Financephobia

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This guide is for entrepreneurs who are afraid of preparing their financial projections. It's the first step to cure "financephobia." It outlines the reasons why you should be hands on and construct your start-up's financial projections yourself.

Published in: Business, Economy & Finance
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Transcript of "Entrepreneur's Cure To Financephobia"

  1. 1. .COM The Entrepreneur’s Cure For Financephobia
  2. 2. What Are Financial Projections? Sales Expenses Many entrepreneurs don’t understand what financial projections truly are. They don’t see the connection between the financial projections and their business idea. They believe that there is a disconnect between their actual business and the financial projections. This is totally wrong.
  3. 3. Your Vision/Idea Expressed as $$$ You see, financial projections are your idea expressed as money! It’s a common language that allows comparison of different business plans. In many ways, money is the source code of business. Lightbulb Picture: http://www.flickr.com/photos/caveman_92223/3346906435/
  4. 4. Your Financial Planning Vision Process Your Financial Projections The financial planning process translates your vision into a set of financial projections. Don’t be scared, it’s easier than you think. You already know most of what’s needed. Dollar Bill Photo: http://www.flickr.com/photos/chego101/3307581950/
  5. 5. Focus In order to do this, it’s extremely important for you to have a clear vision. So, focus focus focus. Picture: http://www.flickr.com/photos/ralphunden/3353207801/
  6. 6. Add Subtract Multiply Divide You already know all you need to construct your financial projections. It’s simple, all you need to know is how to add, subtract, multiply and divide. As a result, it’s illogical and borderline insane to believe that you cannot do the financial projections yourself.
  7. 7. Do your research Do your research. Don’t take your assumptions from thin air. Read annual reports of similar public/listed companies (download them from their website). Check out the Key Financial Indicators for your industry sector. Read news articles on your sector and try to find typical industry conversion rates. Become obsessed. Picture: http://www.flickr.com/photos/cushinglibrary/3865404430/
  8. 8. Your Sales Assumptions Example: Website Sales Traffic Estimator Unique Visitors Conversion rate of 15% Mailing List Subscribers Conversion rate of 6% Sales Your assumptions are the key. The most difficult part to project, are your sales figures. However, if you break these down into the various parts of the sales funnel you can produce reasonable reliable sales projections. Break them down into the first point of contact such as website visitors, enquiries, number of people who enter your shop etc. How many people are your marketing activities going to attract into the top of the sales funnel? Try to find a typical conversion rate for each part of the sales funnel.
  9. 9. Your Expense Assumptions Pick up the phone Go online Get quotes “...” There are a number of methods that you can use to put together your expense assumptions. The single best method to use is to get actual quotes for each expense. Pick up the phone and get quotes for rent. Check out website prices for computers and software etc. This way, you can get your expenses almost 100% accurate. Phone: http://www.flickr.com/photos/8628950@N06/2770856499/ Internet: http://www.flickr.com/photos/dannysullivan/273838692/
  10. 10. Use a Spreadsheet (It’s free) (It’s free) Microsoft Excel Use a spreadsheet. It’s not hard. There are thousand of tutorials on the Internet that will help you. Just type “spreadsheet tutorial” into YouTube. You only need to know how to add, subtract, multiply and divide using one. It will take you less than 10 minutes to figure this out.
  11. 11. Sample Financial Projections and “How to Guide” Download Sample Financial Projections and “How To Guide” You can download a free template and “how to guide” from this link: http://www.lostjobstartbusiness.com/samplefinpro.html
  12. 12. Income Cash Flow Balance Sheet Everything You Cash In Versus Your Sales and Own and Cash Out For Expenses for a Everything You Each Month of Year Owe at a a Year Point in Time Your projections will consist of three main sections. 1) Your Income/Profit & Loss Projections 2) Your Cash Flow Projections and 3) Your Balance Sheet.
  13. 13. Stress Test Your Financial Projections ? Put on your investor hat and question all your assumptions You must be aware that it’s extremely difficult to justify your projections and business model to investors without real world results. However, when you do achieve these, your projections will be much easier to defend. As a result, you should focus on building your business as fast a possible. Get traction and make early stage sales. Remember, your financial projections are just a tool to help you develop your business.
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