3 ms·
Ask HN: How to write financial projections?
Hello,
at the moment I am writing a kind of an business plan for an incubator program. On point is to write projections of profit and loss for the next two years.
My problem is I don't know how to estimate sales. I want to sell a hardware product in the consumer market and I don't think I can make a serious statement about the sales in the next two years.
How did or would you do it. Any are ideas welcome.
Rockin' regards,
Marco
- Alex3917 18y agowww.alexkrupp.com/projections.xls I just added this for you. It should do the trick. Just use the tab labeled "income statement_b" at the bottom and ignore the stuff in the other tabs. Then you can just swap in your own numbers. In terms of figuring out sales, just figure out how many units you can sell per day. If you are in an incubator then you're probably going to be the only sales guy, at least until you hire another. Here is what Guy Kawasaki has to say on the topic: http://blog.guykawasaki.com/2006/11/the_art_of_proj.html http://blog.guykawasaki.com/2006/11/the_art_of_proj.html http://blog.guykawasaki.com/2007/07/how-to-write-a-.html http://blog.guykawasaki.com/2007/07/how-to-write-a-.html
- macco 18y agoThanks for the chart. That is some great work. I will use it tomorow, it is 3 a.m here now. The thing is a consumer you don't sell all your stuff all personally. So its hard to tell, but maybe I should get over it.
- bbgm 18y agoAs Alex mentions, unit sales is usually the best way to do this. Have you benchmarked sales figures for similar products as a possible baseline?
- macco 18y agoNo, but I will try to get some more information on that.
- aliasaria 18y agoMy experience is that good investors know that profit+loss projections for certain kinds of products at certain stages are pretty much useless. In these cases, your goal is to make something that isn't laughable (when forced to make projections). It's easier to forecast expenses -- you know how many engineers you want, and can guess at legal, rent, etc. But it's also good, if you can't have a market ready piece of hardware within two years, to have an alternate source of revenue in the beginning. For example, you could sell a suped-up (expensive) early-adopter version for a year which will serve as a prototype for the real (cheaper) consumer version. Plan to sell very little in the beginning, as that's what always happens in hardware. And consider planning to sell through someone else. For example, if your device has to do with telephony, assume you will sell through one of the major telephone networks in your area. Then guess at what percent of their users in your target market area you can convert in the first year and calculate your cut of the sale. It's easier to estimate sales if you're thinking about taking a bigger and bigger slice out of a large, defined pie (rather than growing from nothing).
- macco 18y agoYeah right, that is a good thought, you are normally not going from 0 to 100. You need some kind of adoption rate.
- rms 18y agoIt's better to make them too big than too small. There's no real reason to be conservative, within reason. If you make them too small you force the investor to think of ways that you could be bigger to generate the return that he or she wants.