KarlieRobinson.com

Yesterday, I had an opportunity to attend a workshop just for SCORE counselors where we went over the Financial Projection model that we use as part of our Simple Steps workshops. It’s not that I or any of the other counselors can’t “run the numbers,” but I, hadn’t used this particular tool and wanted to be sure I could use it if asked.

My first impression of the projection model was that it was probably overwhelming for most would-be small business owners.  Running the financials are scary enough without seeing 21 sheets of calculations.  Though now that I know more about it, I see that 21 pages isn’t 21 pages.  A lot of the sheets are the final numbers and you just need to fill in the blanks, where required, to have a Financials section for your business plan that will knock your bankers socks off.

It couldn’t be easier to get started with.  In fact, if you start on the first sheet, the basic directions are given then, there’s only one box to fill out.

The template also has a convenient color code for you to follow.  Color within a cell means you should add or modify information.  The white areas are where the auto-magic calculations occur and those area’s are protected so you can’t accidentally foul things up.

Yellow cells are the areas where you should put something in the box.  It’s loose requirement since you might not always have a number to enter.  For instance, you might not need any money for business travel, so it’s alright to leave it at zero.

Green boxes are areas where you can add modifiers that will ultimately give you a more accurate projection.  If you know the interest rate on your loan or the life expectancy of your equipment, or have other insights, feel free to add them.

The trick of creating an accurate Financial Projection is knowing that you don’t just sit down and fill it out.  It’s a work in progress and could take more than an afternoon to complete. Expect to find items that you don’t fully understand.

There will be some things you know and can easily add them in the right spots, but you’ll probably stop after each addition to research the number for the next cell.  You should also be prepared to ask questions when you’re stumped or don’t understand the relevance of a particular portion of the financials.

This Financial Projection model can also help you determine your profitability and avoid too many losses by easily modifying your numbers.  As the counselors ran through the projections for a faux bakery yesterday, we initially budgeted $15,000 for a delivery van.  Later on though, we began questioning the need for a van when our profitability looked slim.  Then again, all of our numbers were made up, so we had a little laugh about showing positive cash flow at all.

For your projection, using real numbers, it should be much easier to spot the weak points and determine if they can be overcome.  If they can’t, be glad that you know that before you sink your life savings into a business that will never earn it’s keep.

If you have any questions or comments about using the spreadsheet, feel free to leave me a note, below that way we’ll all learn more about the process.  Otherwise a tweet, Thumbs up or sharing on your favorite service would be greatly appreciated. ~Karlie

Resources

If you’d like to run some numbers of your own you can download SCORE’s “Simple Steps Financial Projection Model.” And don’t worry, you don’t need Microsoft Office for the template to work.  I used OpenOffice.org which is a free download for Windows, Mac and Linux users, or if downloading isn’t your thing, you can order Open Office on a disc.