Finance

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Your Aggressive Business Plan will get Investor Money for Real Numbers Only

( www.cwconsultingnow.com ) You’ve got faith in your business and your plan reflects that in terms of growing projected revenue and ROI. What investor could resist? Sure, it’s great to show confidence in your business model. Obviously, investors appreciate aggressive models when there’s a solid strategy to back it up. And you wouldn’t go into this business if you could make better money managing a Burger King.

But all too often, entrepreneurs forget that investors are likely to hold you to those sales goals that you present in your projections.

At CW Consulting, we see that investments rarely show up in the form of a single check. More likely the funds will be released to you over time – and that’s provided that you’re meeting the projections in your financial model.

So if you project 100k in your first quarter and only hit 10k, the investor is likely to walk and you’re not only out of capital - you’re short on income.

Every business model is different, but there are a few things to keep in mind to make sure your model isn’t overly aggressive:

* If you need most of your capital in the first year, be realistic about your sales projections and take into account the unexpected setbacks that new businesses are particularly vulnerable to. Reflect this in your projections by not “hitting the ground running” with regard to revenue. A one-month setback could throw off your projections drastically.

* Have a firm grasp on your customer acquisition costs. They’re often higher than you would expect. If there’s no available data for your particular industry to rely upon, let the investor know that your estimate is subject to change once you have some historical data. And let them know that this could raise or reduce the amount of investment capital you require.

* Don’t pro-rate your year one expenses over twelve months. If you’re a startup, separate your pre-launch requirements and your post-launch expenses to show the investor what capital you expect to burn through before you see your first dime in revenue.

How aggressive are your projections?

By

Brad Christen
Owner, CW Consulting
www.cwconsultingnow.com