Startup Budget Coaches

Business coaching

You might want to start a business and that includes a prognosis. What are you going to invest, what are you going to spend and how are you going to earn it back? For many starters this is difficult to determine or calculate. Experienced startup budget coaches at TheONE can help you with this. By using market data and other statistics they can help you to make a realistic budget for the first few years of your company.

Contact one of our startup coaches via video calls and ask for advice. You present your business plan to them and together you create a balanced budget within a short time that you can present to banks or investors.

Every budget and forecast for the future is based on assumptions. No one can look into the future, so you never know if the assumptions will come true. The art of making a realistic budget is to make the assumptions as plausible as possible. This is done on the basis of the percentage of certainty that you can assign to an assumption.

Suppose an average baker sells 100 loaves of bread per day. You want to start a similar bakery with similar circumstances such as the number of inhabitants and the average income per inhabitant. If you think that you can sell 10,000 loaves of bread a day without doing anything substantially different, you can reasonably say that the chance of success is less than 1%.

Financial forecasts tips for startups

Everything starts with determining your turnover. What you can easily get confused about as a startup is that your turnover also depends on your promotion activities. This is where the first vicious circle usually begins. How can you determine the turnover if you don't know your marketing budget yet?

Tip 1: Competitive analysis

You are rarely the first to offer a certain type of product or service. Maybe your product or service is unique, but the type of product or service is not. Therefore, find companies with similar products and services and research what their turnover was the first and second year and how much (marketing) expenditure they have made.

Tip 2: Margin

To provide a service or product, costs must always be made. These can be purchase costs or production costs, but also logistics costs to deliver a product. Make a calculation spread over the months that looks like this:

  • Number of sales or hours worked
  • Average sales price per product or hour
  • Average cost per product or service
  • Margin per month

Tip 3: Fixed costs

Every company has fixed costs such as rent, salary, office supplies, etc. These are called fixed costs because they come back every month. Some startups want to minimize costs in the first months. This is logical, but can give a distorted picture of whether the company is or can become profitable. In a prognosis it is therefore wise to include the costs. Whether or not you will actually make them, you can have them depend on your turnover. Fixed costs are for example:

  • Salary and management fees
  • Rent (including gas, water and electricity)
  • Administration fee
  • Office supplies
  • Travel costs
  • Car costs
  • Small purchases
  • Representation costs

Tip 4: variable costs

In addition to the turnover, the most difficult estimate is to define the variable costs. These include marketing expenses and unexpected legal costs. Again, you can analyse similar companies and include the same type of costs as they do.

Note: Always include an estimate in your budget for unforeseen expenses.

Once you've gone through these steps, you'll have a basic forecast. Unfortunately, this does not say anything about reality yet and there is little verification to any reality. That is why you are ready for the next step. Modelling and argumentation.

Financial forecasts for startups modelling.

Always ask an expert to help you model your forecasts. Many startups are too optimistic or too pessimistic about their own prognosis. Most banks and investors want to see 2 budget scenarios: a worse case scenario and a best case scenario.

Worse case scenario for startups:

Try to substantiate with as many market figures as possible why everything is wrong. In addition, you predict more costs, much less revenue and your marketing campaign is only 50% effective. The outcome is the worst case scenario that can happen to you as a starting entrepreneur. This is important to know, because it shows the potential risk of the company.

Good case scenario for startups:

Try to substantiate with as many market figures as possible why you are doing much better than similar companies. Everything is fine, the costs are lower and the turnover rises faster than you dare to hope for. The risk of making a good case scenario is that you will calculate profusely. An external startup budget coach at TheONE can protect you from this.

Ask for advice from a Startup Budget now and make your first realistic prognosis and budget.

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