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May 7, 2019

Financial Projections for Startups

Financial Projections for Startups

Introduction:

A startup has to make financial projections, in the shape of a profound roadmap for an effective business plan. The projections cover the overall financial requirements, including outside funding. It is important to have adequate startup capital and ensure the proper supply of cash to meet future requirements.

Business Plan:

A startup has to make a business plan before soliciting the required finance for the new venture. It is a written presentation, briefly & carefully explaining the business opportunity. The business proposal incorporates the deep detail of the business model and the financial risks and rewards involved in the business plan. A business plan invariably narrates about the management team, and the products or services. It should also include the goals setup and the strategies to be followed to meet the set targets. A business plan covers the topics of Pain Point of the Market, Feasibility, Legal Issues, Market Sizing, and Profit Optimization, specific to its business or service. The business plan formulated must also include SWOT Analysis (Strengths, Weaknesses, Opportunities, and Threats).

Financial Projections:

A fruitful business plan must include the Capital Investments, Cash Flow Challenges, and Product Development Cycle, etc. Each and every startup requires financial projections of a peculiar and unique nature. Prudence should be the keyword when raising funds. There are various sources of finance available in the financial markets. The procurement of funds for the business must be done at the most competitive rates. The business plan must separately mention the quantum of Short-Term Funds, Medium-Term Funds, and Long-Term Funds required. Understanding the pros and cons of debt and equity investment is critical.

Analysis:

Financial projections must take into consideration Analysis of Market Scenario, Competitive Advantage, Economies of Scale, and the Target Market. In other words, financial projections cover the estimation of the total project costs and the procurements of funds accordingly. It must also include various analytical charts and graphics like Discounted Cashflow, Cost-Volume-Profit Relationship, and Ratio Analysis. The business plan should also reveal the calculations regarding the Input Costs and Revenues Projected.

Resources:

A startup must try to tap the various types of resources depending upon their terms & conditions. Of these resources, financial resources are the most essential for meeting the various types of capital costs and investments. There is no business without capital. Most of the startups face an uphill task during the mobilization of financial resources. They utilize the combo pack of own savings and borrowings from family and friends. Banks and other financial institutions are mostly unwilling to lend to the startups because of the risks involved.

Financial Feasibility and Viability Report: The fundamental and primary objective of every business plan is to optimize profits. So thorough scrutiny and analysis must be made of all the financial aspects of the business plan. An effective business plan must be technically feasible, successfully marketable, and financially viable. It has to take into account capital costs, operating costs and marketing costs. After that, a prudent judgment should be made with the revenues projected. The financial performance of a business plan is always based on financial projections. The business plan has to accurately assess the projected quantitative financial figures and must not make haphazard guesswork.

 

Services Offered:

Helping startups to identify whether the business opportunity is profitable and viable is in our DNA. Our Professionals actively work hand-in-hand with your team in the initiation process, planning process, successful implementation process. They prepare cost and benefit analysis in addition to the overall financial analysis. The ultimate motive is to create a sound financial framework for your business.

To conclude, we can add: β€œIn the end, every startup is different. But in the beginning, every startup is the same.”― Richie Norton

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