Why Build a Financial Forecast

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

Startups should build a financial forecast for their business.

Even if the future is uncertain and all the data is not known, it's still important to build one.

Here are the reasons why:

It validates the founder's hypothesis.

A founder should have a hypothesis about the business.

A financial projection helps determine its feasibility.

It also determines how much funding to raise.

The financial forecast shows the cost to start and run a business.

The fundraise amount is a key component of the plan.

It communicates the plan to investors.

The investors want to know what the founder is thinking about the business.

This includes the growth rate of revenue, the size of the team, and the cost of doing business.

It demonstrates the business can become profitable and scalable.

The financial forecast also shows when the business will become profitable and how much money could be generated by it.

Founders should include a slide in the deck for the five-year financial forecast.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let's go startup something today.

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