5 Tips to Making Your Startup Financials Believable
In the startup world, it’s all about making a believable “hockey stick”, i.e., a growth or sales chart that takes a fast turn for the better and just keeps ascending. If you want funding or notoriety, you better have a hockey stick. But anyone can make a hockey stick in financial modeling, thus the challenge is making one that you can actually defend. So here’s some tips on how to take the bull out of your startup shtik:
1. Use Citations
A citation is a reference to an authoritative study, book, paper or author. Financial assumptions that are based on the opinions of scholars or experts lends credibility to your arguments. SumoSum includes Footnote Sections in each Assumption Section for you to record citations and other notes that support your assumptions. Footnotes will print as part of your reports.
2. Be Conservative
A conservative estimate or guess is one in which you are cautious and take the safest route. Under-estimating lends to a more credible argument than being overly optimistic. Thus, stay vigilant to not over-sell your concept and avoid airy-fairy assumptions. As you create assumptions, be sure to write justification notes in the SumoSum Assumption Footnotes Section.
3. Stay Within Industry Spectrums
Research typical spectrums for your industry online and record citations in Footnotes. For example, If you were doing a financial forecast for a food truck business, search for “food truck marketing costs by percentage.” Search engine results like blog posts from credible sources are good citations for Footnotes.
4. Scale & Trend Proportionately
You can also research for typical growth curves or sales cycles in your industry. For example, if you’re doing a financial forecast for a boutique, an online search might find a seasonal sales pattern that is heavy for the holiday season with low activity for other parts of the year. The SumoSum Assumptions section is equipped with scaling and trending features to help you model patterns in a fast, easy and accurate manner.
5. Review Charts & Reports
SumoSum offers real-time charts and reports that show your financials as they develop giving you superior perspective and insight.
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