Written by Itay Sagie, Co-Founder at VCforU.com
Many entrepreneurs struggle with the financial plan for many reasons. For early stage companies, we are talking about a forecast with too many unknowns for it to be executed as planned. Nevertheless there are a few tips you can follow to create a financial plan that make sense.
1. Assumptions are the root of your entire plan. The investor will grill you about your assumptions to make sure they are realistic and you know your stuff. Some assumptions can be validated, such as the expected price for your product based on market research, willingness to pay survey, comparable prices of competitors etc. The same goes for your margins, and more. These are parameters which can be estimated relatively accurately. What is very difficult to forecast is your growth rate, especially in early stage companies.