Working out key financials


1

Hi i am writing my business plan, I have identified my potential revenue streams such as;

1) Ticketing and Merchandising
2) Advertising

As well as a few others, however how do you go about predicting how much you will make from them, what is the rule?

Finance Revenue Forecast Cash Flow

asked Apr 11 '11 at 07:49
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Pmillio
57 points
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1 Answer


1

There isn't a general rule. Your company is unique. Your unique value proposition to your customers will be priced in a way the reflects the value you add to them. As such your per unit sales -- and life time customer value will be unique. The market you are in will provide benchmarks for you.

That being said -- you need numbers in your spreads of your business plan right?

So focus on revenue source #1 -- since these are the customers of your primary product. The second is a separate product with a different customer. Allow that to be "frosting on the cake" if it emerges -- but build your business plan around providing one product/service to one customer group.

On the ticketing and merchandising -- you need to make a set of assumptions. How many people visit the store. What percentage of them make a purchase. What the average purchase it. These assumptions need to be based on a couple things -- among these are:

  • Facts of what you have done and demonstrated during your beta
  • Facts that can be defended
  • Market research from reputable firms
  • Benchmarks for your industry/market
  • Conservative assumptions of market penetration
  • What passes the "gut test"
  • Who the audience for your business plan is and what they will believe.
  • What the purpose of your business plan is

As I am sure you can tell, this is a lot of work. There is a short cut -- having a track record and extrapolating. "We have done this for this amount and with an infusion of this we could do this projected amount." By implementing and developing a model you will have factual numbers that can be defended. Then your projected financial numbers will mean something -- far more than the pixels they were concocted upon.

I am sure you will here it from many -- there are hundreds of award winning start-up business plan collect dust on the basement and attic shelves. Why? Because they were not written iteratively with implementation. Make your business plan a living breathing document. Start doing. Document what your tracking numbers are. Make them the basis of your business plans projections.

Good luck --

answered Apr 11 '11 at 12:31
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Joseph Barisonzi
12,141 points

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