How do financial projections help startups build a successful business?

What is a financial projection?

Every startup and small business needs a financial plan

The difference between business and finance plans

Best practices for creating a robust financial plan

1. Define the purpose and the time horizon

  1. Short-term projections (12–24 months): A breakdown by month is important for a company to ensure it has sufficient cash to fund its growth plan in the short run, especially for new businesses. Knowing when to hire your next employee or when is a good time to pour fuel on marketing and sales efforts can help you avoid a cash crisis.
  2. Medium-term and long-term financial projections (3–5 years): They are better suited to help you answer when your company will become profitable, whether you can service your debt obligations, and exhibit the size of the opportunity.

2. Develop an integrated 3 statement financial model

3. Visualize your most important data

4. Stress-test your business model by including various scenarios

5. Use variance analysis to identify and improve your financial projections

Executive summary

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I am a freelance management consultant specialized in financial modeling, FP&A, and risk management. My background is in corporate banking and I am a CMA.

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Jachim Gobien

Jachim Gobien

I am a freelance management consultant specialized in financial modeling, FP&A, and risk management. My background is in corporate banking and I am a CMA.