Tips from the Experts on Preparing Financial Projections

Tips from the Experts on Preparing Financial Projections

By Brian Walsh, UWMRF Senior Technology Commercialization Manager

Startup and small business entrepreneurs are often faced with the task of preparing financial statements and forecasts in search of funding and in making important decisions. While many dread this task, tending to key metrics can make the difference between success and failure. A recent UWM Research Foundation panel featured different perspectives from three financial insiders – investor, commercial lender, and business consultant.  

• • • Jasmine Mercado, Vice President, and Regional Banking Relationships with Huntington National Bank 
    • Karen Plunket, Managing Director of Milwaukee Venture Partners 
    • Lucy Waldhuetter, Business Transformation Consultant with Wisconsin Manufacturing Extension Partnership.  

  Here are some key takeaways.  

1. 1. 1. No matter who you are talking to, the rationale behind the numbers is important. Entrepreneurs can demonstrate financial savviness by knowing their industry well and creating realistic projections that they can back up in discussions with potential funders.
      2. Financials are part of your roadmap. Looking at your business through them can help you get to your destination. New business, new building, new market, new product, new employee – entrepreneurs should be ruthless with themselves in calculating the variable profit for each decision based on anticipated incremental revenue and costs.
      3. Find the right kind of funder for your needs. Friends and family, grants, crowdfunding, commercial loans, and investment capital are all options for financing a business. For lenders, cash flow is a critical metric. They can only extend money if you have income to support paying it back. Investors, on the other hand, might not be as concerned about short-term cash flow. They are typically interested in riskier ventures that can grow big and fast (scale) with the potential to cash out through an exit several years down the road.
      4. Have some skin in the game. This is especially important for startup entrepreneurs. Risking some of your own time and money is a tangible way to show funders you are committed to making the venture work. Investors want to see bootstrapping. With lenders, this will likely show up in the form of down payments and collateral.
      5. Take advantage of free and low-cost resources. Wisconsin has some great resources for small businesses.

We recommend:

• • • Small Business Development Center (SBDC) in your area is highly recommended. Their services are free, they have lots of connections, and they can help with financials, business plans, and more.
    • The Service Corps of Retired Executives (SCORE) is a national organization that provides free mentorship and consultation services to entrepreneurs.
    • Start In Wisconsin offers a comprehensive online directory of resources and a calendar of entrepreneur-focused events.