Dear SaaStr: What do Most Startup Founders Get Wrong About Financial Projections?
The #1 thing I see with financial projections is they just don’t speak with data. Instead, they speak with dreams.
Your core financial projections, at least for the next 12–18 months, should be based on your trailing 4 months of data:
- How fast did you grow for the last 4 months, on average?
- How much did you burn for the last 4 months, on average?
That should be the Base Plan at least for the next 12–15 months. Then, you can model up or down from there.
Way, way too many founders model what they want to see. Not what the last 4+ months of data predict.
The last 4 months are usually far more accurate.
Behind plan for the year?
Build a L4M Model — and share it. You probably won’t like it. And that’s the point.
“The Power and Honesty in a L4M Model. Build One Now.” https://t.co/Oedu6eCnOn
— Jason ✨BeKind✨ Lemkin #ДобісаПутіна (@jasonlk) April 25, 2022
Dream Plan image from here