Finance is hard, it’s not fun and nobody likes it. And until you start generating cash, there’s no way you’ll be correct in your projections. So why do it?
Because of yesterday’s quote; it’s not the plan, it’s the planning. Going through your financial planning exercises is one of the most revealing activities you can do. It reveals what you really know about your business. It forces you to think about pricing. It shows what you know about your market size and growth trend. On the cost side, it let’s you know how much money you are going to need to raise and what your burn rate is.
Knowing your value proposition and your market segments are vital but financial planning will answer if you are going to have a business.
Get help and spend the time.
Blogging Gazzelle is published daily by Shawn Carson
Planning is important. Analysis is as well. It is useful to search for patterns that could reveal some repeatability and predictability.
You need to do the market research and you need to pour over your financials, but as Pete Seeger wrote, there’s “a time for every purpose under Heaven.” Planning and analysis must soon end because neither generates cash.
Confirm your instincts, get the data for the pitch and make sure the numbers tie together. Then go get your product in your customer’s hands!
Read Reality Check by Guy Kawasaki
Blogging Gazelle is published daily by Shawn Carson
Happy Labor Day!
According to CBS, it costs a quarter million dollars to raise a kid to the age of 18. Check out the cost breakdown: http://www.cbsnews.com/8301-505144_162-57598411/what-it-costs-to-raise-a-kid-$241080/
Tack on another $100k to get them through a public university. If you did a full financial analysis complete with a discounted cash flow and IRR, there is absolutely no break-even point.
But that’s not why we have kids.
“All financial projections are lies.” So goes the Venture Capital joke. They have to be believable and pass the sniff test when you tell your story but no one can predict the future, nor can we predict customer behavior. There will be a time when you must crunch the numbers, tweak the models, build the spreadsheets and analyze the scenarios.
But in the startup phase, no amount of analysis will justify the investment. That will come from customer validation so run the numbers and then, as Guy Kawasaki would say, “go make meaning”. If you find a way to ease the pain and create delight for your customers, the numbers will follow.