Day 11: Numbers

Before you can be in a good position to pull the trigger, you need to get clear on the numbers. How much money will you need to raise to get started? How much profit can you reasonably expect to generate (if any) in a week, month or year? Ultimately it’s working out if your idea translates into a business. And even if it does, is it worth your time?

Two basic documents to prepare are a list of start-up costs – everything you will need to spend money on to get you to the point of generating revenue – and a projected profit and loss statement that shows revenue, expenses and profits over time. As a rule of thumb we overestimate on costs and underestimate on revenue to give ourselves plenty of headroom.

Getting this in place not only validated the idea as a business, it allows us to stay grounded in reality moving forward. As costs are revised we can see their impact on the big picture, and spot other opportunities to save money. Financial viability and the way this is managed are also principal concerns for investors.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s