You’re Projecting: Impress Investors with Financial Forecasts
Making accurate financial projections is likely the most difficult part of your food startup business plan. You’ve already had to make wild guesses about the market, your costs, and your pricing structure. Now you’ve got to turn all those figures, and more, into a forecast that you’ll be judged against for the next five years. Sounds easy, right?
Before you run screaming for the hills, we have a few resources. Even the most spreadsheet-averse among us can understand this template, from Score. This amazing free resource will help you keep up with payroll, operating expenses, COGS, and much more. Don’t reinvent the wheel when you don’t have to!
Projections for investors
You may be making financial forecasts in order to woo a set of potential investors. They’ll want to see extremely fast growth, but with enough realism to be convinced that you are serious. No easy feat. We love this handy list of projection tips, from Huffington Post, for a no-nonsense idea of what to expect. As the author points out, an investor is investing “in you, not the numbers.” Displaying wild, aggressive numbers implies that you might not be a steady bet. And on the other hand, aiming too low can display a lack of confidence or drive. The Goldilocks of financial projections is somewhere in the middle!
Avoid common mistakes
If you don’t even know where to begin with your projections, this blog from Tim Berry is a good kick in the butt. His list of mistakes that entrepreneurs commonly make is chock full of useful knowledge. Here’s our top takeaways:
- Don’t underestimate marketing expenses! Berry uses tech businesses as an example, but food businesses are just as susceptible to forgetting this aspect. Demo-ing, advertising, brokering – it all costs money.
- Don’t underestimate regulatory expenses. Another great point for food businesses – keeping yourself FSMA-compliant isn’t free.
- Underestimating sales cycle length. Budget far more time than you’d think for the sales you make to be converted into actual cash in the bank.
With these great resources, you’ll have savvy and meaningful financial projections that will impress investors and inform your business plan. Don’t be overwhelmed by numbers or spreadsheets if you’re new to the world of finance – just download your template and start planning your dreams!