How to estimate a Startup’s projections

One of the most difficult tasks an entrepreneur faces is how to create financial projections.  How do you make estimates on something that’s never been done before?  Where do you find relevant and factual information?The easiest way to find information is to identify public companies that provide a similar product or service and search them on the SEC’s EDGAR system.  Pull up their annual 10-K filing, which provides an immense amount of information including both financial metrics and business risk assessments.  Consider profit margins, operating costs, capital requirements, etc and then apply those metrics to your own projections and operations.  Look at the MD&A and see if Management has projected expected revenue growth in the sector.  Realize however, that larger public companies get better margins and deals than do startups, so remember to price that in.  In addition, public companies also can incur significant regulatory costs that private companies do not. BizCFO is an accounting and finance consulting firm with offices in Santa Monica, Orange County, and San Diego, providing quality professional services. For additional complimentary information regarding this topic or other questions you may have please call one of BizCFO’s offices located in Southern California or contact us here.