Comments on: Financial forecasts in a business plan http://www.theequitykicker.com/2009/12/04/financial-forecasts-in-a-business-plan/ Nic Brisbourne's view from London on venture capital and exploiting change in technology and media Sat, 11 Feb 2012 20:08:00 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Top 50 » Top 50 Venture Capital Blog Posts of 2009 http://www.theequitykicker.com/2009/12/04/financial-forecasts-in-a-business-plan/#comment-7255 Top 50 » Top 50 Venture Capital Blog Posts of 2009 Mon, 10 May 2010 06:51:32 +0000 http://www.theequitykicker.com/2009/12/04/financial-forecasts-in-a-business-plan/#comment-7255 [...] Financial Forecasts in a Business Plan [...] [...] Financial Forecasts in a Business Plan [...]

]]> By: Financial Yan http://www.theequitykicker.com/2009/12/04/financial-forecasts-in-a-business-plan/#comment-6829 Financial Yan Wed, 10 Feb 2010 22:56:46 +0000 http://www.theequitykicker.com/2009/12/04/financial-forecasts-in-a-business-plan/#comment-6829 Great thought on financial forecasting. That spreadsheet torture part is so true. Great thought on financial forecasting. That spreadsheet torture part is so true.

]]> By: Suzane Fadrik http://www.theequitykicker.com/2009/12/04/financial-forecasts-in-a-business-plan/#comment-6777 Suzane Fadrik Wed, 03 Feb 2010 14:30:39 +0000 http://www.theequitykicker.com/2009/12/04/financial-forecasts-in-a-business-plan/#comment-6777 First and foremost, a business plan is never started by the executive summary. The exec summary is the last thing you write; it summarizes all the content of the business plan.Secondly, the business plan is not an idea only<a href= <a href="http://www.prime-targeting.com/expert-entrepreneur/" rel="nofollow">http://www.prime-targeting.com/expert-entrepren...</a>> Famous entrepreneurs</a>. It may start with an idea, but the content is aimed at showing how you will make a success of it. As important as your idea - if not more - will be the management team you put together to bring it about. It is very important to demonstrate your understanding of the competitive environment and to show that you have thought, and can explain, of a clear proposition that makes you unique against those competitors. As important is how you intend to fight off competition if your idea/product can't be ring-fenced. First and foremost, a business plan is never started by the executive summary. The exec summary is the last thing you write; it summarizes all the content of the business plan.Secondly, the business plan is not an idea only<a href= http://www.prime-targeting.com/expert-entrepren…> Famous entrepreneurs. It may start with an idea, but the content is aimed at showing how you will make a success of it. As important as your idea – if not more – will be the management team you put together to bring it about. It is very important to demonstrate your understanding of the competitive environment and to show that you have thought, and can explain, of a clear proposition that makes you unique against those competitors. As important is how you intend to fight off competition if your idea/product can't be ring-fenced.

]]> By: brisbourne http://www.theequitykicker.com/2009/12/04/financial-forecasts-in-a-business-plan/#comment-6337 brisbourne Fri, 04 Dec 2009 17:31:53 +0000 http://www.theequitykicker.com/2009/12/04/financial-forecasts-in-a-business-plan/#comment-6337 No - I'm saying that they should put a date for the US launch in the plan and start raising money 6-9 months earlier so they will have the money in the bank in good time. If the funding takes longer than expected the forecasts can be revised. No – I'm saying that they should put a date for the US launch in the plan and start raising money 6-9 months earlier so they will have the money in the bank in good time. If the funding takes longer than expected the forecasts can be revised.

]]> By: David Smuts http://www.theequitykicker.com/2009/12/04/financial-forecasts-in-a-business-plan/#comment-6336 David Smuts Fri, 04 Dec 2009 17:26:22 +0000 http://www.theequitykicker.com/2009/12/04/financial-forecasts-in-a-business-plan/#comment-6336 YES good point about risks with new launches. So tell me, if a company like Spotify for example, was raising a Series B (or is it C?) round of funding to launch in the US and their revenue projections for the US were obviously contingent on funding being raised in this funding round, are you saying as a VC this would be too risky? that you would expect Spotify to get some US excposure (market traction) first before commiting risk capital for a full launch? That seems just to cautious to me, I know many VCs would turn this down as too risky, but then there are others who think the opportunity outweighs the risk. Interested to know what you think? YES good point about risks with new launches. So tell me, if a company like Spotify for example, was raising a Series B (or is it C?) round of funding to launch in the US and their revenue projections for the US were obviously contingent on funding being raised in this funding round, are you saying as a VC this would be too risky? that you would expect Spotify to get some US excposure (market traction) first before commiting risk capital for a full launch? That seems just to cautious to me, I know many VCs would turn this down as too risky, but then there are others who think the opportunity outweighs the risk. Interested to know what you think?

]]> By: brisbourne http://www.theequitykicker.com/2009/12/04/financial-forecasts-in-a-business-plan/#comment-6335 brisbourne Fri, 04 Dec 2009 17:10:39 +0000 http://www.theequitykicker.com/2009/12/04/financial-forecasts-in-a-business-plan/#comment-6335 Hi David - the catch with this line of thought is that funding contingent launch events are fraught with risk - ie the funding can happen and the launch event doesn't go as planned for some reason. It is better to find a way to part launch and get some progress so the next (maybe full) launch is simply the next stage in an existing plan. Then put some dates around it and build enough time into the schedule to raise capital. If it ends up slipping a little because funding takes a little longer than expected nobody will mind that much. Hi David – the catch with this line of thought is that funding contingent launch events are fraught with risk – ie the funding can happen and the launch event doesn't go as planned for some reason. It is better to find a way to part launch and get some progress so the next (maybe full) launch is simply the next stage in an existing plan. Then put some dates around it and build enough time into the schedule to raise capital. If it ends up slipping a little because funding takes a little longer than expected nobody will mind that much.

]]> By: David Smuts http://www.theequitykicker.com/2009/12/04/financial-forecasts-in-a-business-plan/#comment-6334 David Smuts Fri, 04 Dec 2009 16:30:33 +0000 http://www.theequitykicker.com/2009/12/04/financial-forecasts-in-a-business-plan/#comment-6334 Interesting tweet Nic. For funding growth companies you're absolutely right about that too (to an extent). I keep telling Entrepreneurs that VCs don't fund seed stage, only growth, but for some reason they seem to believe otherwise!<br><br>The only comment here is that if you have a growth company which is about to launch into a new market or new product then often forecasting new revenues are contingent upon launch events, which of course are contingent upon new funding. In this case it makes absolute sense for a growth company to forecast like a GANNT chart Q1, Q2 etc.., It's how we forecasted in Cardinal Health, having learned the bitter experience of forecasting dates which were contingent upon resourcing (or VC funding in your example). <br><br>I wouldn't throw away a business plan solely because it did not forecast by specific dates. I can usually tell if an investment is too early by looking at the exec summary before I even need to waste any time reading the forecasts. Interesting tweet Nic. For funding growth companies you're absolutely right about that too (to an extent). I keep telling Entrepreneurs that VCs don't fund seed stage, only growth, but for some reason they seem to believe otherwise!

The only comment here is that if you have a growth company which is about to launch into a new market or new product then often forecasting new revenues are contingent upon launch events, which of course are contingent upon new funding. In this case it makes absolute sense for a growth company to forecast like a GANNT chart Q1, Q2 etc.., It's how we forecasted in Cardinal Health, having learned the bitter experience of forecasting dates which were contingent upon resourcing (or VC funding in your example).

I wouldn't throw away a business plan solely because it did not forecast by specific dates. I can usually tell if an investment is too early by looking at the exec summary before I even need to waste any time reading the forecasts.

]]> By: brisbourne http://www.theequitykicker.com/2009/12/04/financial-forecasts-in-a-business-plan/#comment-6162 brisbourne Fri, 04 Dec 2009 10:31:53 +0000 http://www.theequitykicker.com/2009/12/04/financial-forecasts-in-a-business-plan/#comment-6162 No - I'm saying that they should put a date for the US launch in the plan and start raising money 6-9 months earlier so they will have the money in the bank in good time. If the funding takes longer than expected the forecasts can be revised. No – I'm saying that they should put a date for the US launch in the plan and start raising money 6-9 months earlier so they will have the money in the bank in good time. If the funding takes longer than expected the forecasts can be revised.

]]> By: David Smuts http://www.theequitykicker.com/2009/12/04/financial-forecasts-in-a-business-plan/#comment-6161 David Smuts Fri, 04 Dec 2009 10:26:22 +0000 http://www.theequitykicker.com/2009/12/04/financial-forecasts-in-a-business-plan/#comment-6161 YES good point about risks with new launches. So tell me, if a company like Spotify for example, was raising a Series B (or is it C?) round of funding to launch in the US and their revenue projections for the US were obviously contingent on funding being raised in this funding round, are you saying as a VC this would be too risky? that you would expect Spotify to get some US excposure (market traction) first before commiting risk capital for a full launch? That seems just to cautious to me, I know many VCs would turn this down as too risky, but then there are others who think the opportunity outweighs the risk. Interested to know what you think? YES good point about risks with new launches. So tell me, if a company like Spotify for example, was raising a Series B (or is it C?) round of funding to launch in the US and their revenue projections for the US were obviously contingent on funding being raised in this funding round, are you saying as a VC this would be too risky? that you would expect Spotify to get some US excposure (market traction) first before commiting risk capital for a full launch? That seems just to cautious to me, I know many VCs would turn this down as too risky, but then there are others who think the opportunity outweighs the risk. Interested to know what you think?

]]> By: brisbourne http://www.theequitykicker.com/2009/12/04/financial-forecasts-in-a-business-plan/#comment-6160 brisbourne Fri, 04 Dec 2009 10:10:39 +0000 http://www.theequitykicker.com/2009/12/04/financial-forecasts-in-a-business-plan/#comment-6160 Hi David - the catch with this line of thought is that funding contingent launch events are fraught with risk - ie the funding can happen and the launch event doesn't go as planned for some reason. It is better to find a way to part launch and get some progress so the next (maybe full) launch is simply the next stage in an existing plan. Then put some dates around it and build enough time into the schedule to raise capital. If it ends up slipping a little because funding takes a little longer than expected nobody will mind that much. Hi David – the catch with this line of thought is that funding contingent launch events are fraught with risk – ie the funding can happen and the launch event doesn't go as planned for some reason. It is better to find a way to part launch and get some progress so the next (maybe full) launch is simply the next stage in an existing plan. Then put some dates around it and build enough time into the schedule to raise capital. If it ends up slipping a little because funding takes a little longer than expected nobody will mind that much.

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