When starting your business, financial forecasts can seem overwhelming. Luckily Entrepreneur Magazine made an easy-to-follow guide for forecasting revenues and expenses during startup phase.
Up late again working as usual. I’m writing this at 3:53 a.m. because well, I need to start blogging again and I love to share valuable information with people. I am not one to write in a diary so I figure I will just start utilizing my blog to fill that role. Plus you can’t make money by writing in a diary, unless you have Steve Jobs diary and can sell it for Millions. Anyhow… let’s get right to it.
I’m working on an Estimated profits and Loss spreadsheet for a new business I am forming (in the midst of forming) with a partner. I enjoy looking at the numbers on these spreadsheets, I just don’t like creating them. I’d rather tell them to someone else and watch them create a beautiful spreadsheet.
So I did a few searches and found this cool article from Entrepreneur titled “How to Forecast Revenue and Growth.” You can check it out here:http://www.kyleblakeallred.com/entrepreneur-magazine-how-to-forecast-revenue-and-growth
Here are the three things they stated in the article you need to have.
- Start with expenses, not revenues.
- Forecast revenues using both a conservative case and an aggressive case. This one really spoke to me. The article went on to say:
If you’re like most entrepreneurs, you’ll constantly fluctuate between conservative reality and an aggressive dream state which keeps you motivated and helps you inspire others. I call this dream state “audacious optimism.” Rather than ignoring the audacious optimism and creating forecasts based purely on conservative thinking, I recommend that you embrace your dreams and build at least one set of projections with aggressive assumptions. You won’t become big unless you think big! By building two sets of revenue projections (one aggressive, one conservative), you’ll force yourself to make conservative assumptions and then relax some of these assumptions for your aggressive case.
- Check the key ratios to make sure your projections are sound.
Just click on this link if you want to read the whole article and I recommend you do. http://www.kyleblakeallred.com/entrepreneur-magazine-how-to-forecast-revenue-and-growth
There is also a video of Daymond John, creator of the Clothing Line Fubu in the article that is great. I really enjoy watching Daymond on Shark Tank. In fact I enjoy watching everyone on Shark Tank and my entire family will sit down and watch it with me. Imagine 4 kids under 10 watching Shark Tank. You better believe I am raising some self-reliant Entrepreneurs. They absolutely love the show and want to go on it someday. I have no doubt they will, maybe our entire family will someday!
Check out this video by Daymond, just ignore the stupid bird in the background squawking. I don’t know why they didn’t scare the bird off. I probably would have shot the bird if I could. Just saying…
Shark Tank’s Daymond John on Lessons From His Worst Mistakes