The Pro Forma Financial Statements, or: What?

One of the primary challenges in developing a solid business plan is creating pro forma financial statements. Here’s a general overview of what goes on during this process:

Oh, we’ll definitely sell 4,000 of those a month. Freakin’ easy. Like, child’s play. 

Wait, hm.. 4,000 is a lot. Let’s be reasonable here; we’re reasonable folk, right? We’ll say 3,000.

Oh my god. 3,000? There’s no way. Actually, our product isn’t even any good. Maybe we can dupe 2,000 into buying.

2,000?! I only have like 600 friends on Facebook. Where does the other 1400 come from?

Oh crap, we need to sell 2500 for me to make a salary. We can definitely sell 2500. Well, maybe we can cut down on our costs…

The uncertainty is both thrilling and terrifying. The possibilities are endless, but that’s exactly what makes this process so stressful. The possibilities are endless.

If you’ve done discovery, you should have a decent idea of how many people will buy your product, but the variables are always outstanding. What if there’s an unbelievable rush, and you’re left knee-deep in an inventory wait list? Worse things have happened, but you don’t want to end up with unhappy customers, either.

What if there’s no rush at all? Worse things have happened, but probably not in terms of a startup.

The best thing we can do is use everything we’ve learned, analyze the competition, be reasonable, but be positive. A pro forma financial statement might not be completely accurate, but it provides the cornerstone on which you build the rest of your business. From the pro forma financial statement, your business, your action, and your business plan will follow.

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