Don't pilot your business blindly.
Financial forecasting is tricky. For business startups, it's even harder due to a lack of historical data from which to extrapolate. Entrepreneurs seeking financing from angel investors or venture capitalists will need to have a convincing financial forecast. Banks will require financial forecasts for loans. For new businesses, the key to good financial forecasts is frequent reevaluation of their forecasts. As historical data accrues, the accuracy of the forecasts will tend to improve.
Predicting revenue can be the most difficult part of financial forecasting. Particularly for new ventures, entrepreneurs may have a tendency to allow optimism to influence what should be a rational assessment of future revenue. RMIP experts can help deliver unbiased assessments to aid entrepreneurs in developing the best financial forecast possible.
Startups should continually revise their financial forecast. Entrepreneurs in the early stages of launching a business should revisit their revenue and expenses weekly, using deviations from previous predictions to continually update their predictions. This disciplined approach helps to ensure entrepreneur enthusiasm doesn't mask the actual situation, causing miscalculation and misstep.
Financial forecasting goes beyond current-state accounting. A wise entrepreneur looks down the financial road to anticipate problems. Contact RMIP today to start discussing this and other topics that can help you accelerate your business with greater confidence.