How to prepare financial projections for startups !!

Financial projections for startups are a critical tool for understanding your financial health and making better business decisions. They can also be used to attract investors and apply for loans.

Here are the steps involved in creating financial projections for a startup:

Gather your data. The first step is to gather all of the relevant financial data for your business. This includes your income statement, balance sheet, and cash flow statement. If you don't have these statements, you can create them using accounting software or by working with a financial advisor.

Make assumptions. Once you have your data, you'll need to make some assumptions about your future financial performance. These assumptions should be based on your knowledge of the industry, your business, and the economy. For example, you might assume that your sales will grow by 10% each year or that your costs will increase by 5%.

Create your projections. Once you've made your assumptions, you can use them to create your financial projections. There are a number of different software programs that can help you with this, or you can create your own spreadsheet.

Review and revise your projections. Once you've created your projections, it's important to review them carefully. Make sure that they are realistic and that they make sense. You may need to revise your projections several times before you're satisfied with them.

Use your projections. Once you're happy with your projections, you can use them to make better business decisions. For example, you can use them to set goals, allocate resources, and manage your finances.

Here are some additional tips for creating financial projections for startups:

Be as specific as possible. The more specific your projections are, the more useful they will be.

Use a variety of sources. Don't rely on just one source of information when making your assumptions.

Get help from a professional. If you're not comfortable creating financial projections yourself, consider working with a financial advisor.

Here are some of the key financial statements that you will need to create financial projections for your startup:

Income statement: The income statement shows your business's revenue, expenses, and profits over a period of time.

Balance sheet: The balance sheet shows your business's assets, liabilities, and equity at a specific point in time.

Cash flow statement: The cash flow statement shows your business's cash inflows and outflows over a period of time.

Once you have created your financial projections, you can use them to make better business decisions. For example, you can use them to:

Set goals: Your financial projections can help you to set realistic goals for your business. For example, you might set a goal of increasing your sales by 10% in the next year.

Allocate resources: Your financial projections can help you to allocate your resources in the most effective way. For example, you might decide to invest in marketing if you believe that it will help you to increase your sales.

Manage your finances: Your financial projections can help you to manage your finances more effectively. For example, you might use them to create a budget or to track your spending.

Financial projections are an important tool for any business, but they are especially important for startups. By creating financial projections, you can gain a better understanding of your business's financial health and make better business decisions.

Read the Founder’s Guide to Financial Modeling by Dave Lishego

Use his finacial model template as a starter.