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Are your financial projections believable?

"Show me something I can believe."
- Common Venture Capitalist comment

Excerpted from Business Black Belt by Burke Franklin

Many people think a set of financial projections is a business plan. Numbers lie or can be used to distort the facts. Most experienced financial people know that a financial projection, no matter how honest and forthright it is, does not present the full picture. I've talked to thousands of bankers, investors, and customers. They've emphasized how important it is to address the state of your market, describe your product or service in detail, understand and formulate your marketing strategy, carefully outline your promotion and sales plans, and most importantly, to introduce the management team responsible for using the capital and driving your business toward success. According to the money people, all of this information provides credibility for your financial projections.

Rule of Thumb
How big is 1% of your market?
What kind of revenues would you be doing if you captured 1% of the space?

Your financial projections demonstrate the viability of your business, whether it's a start-up or an established company. Different financing sources look for different things and emphasize different areas-you must be prepared for all of them. All of them make a difference to the success or failure of your business.

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