Building a financial projection

• What exactly is a financial projection spreadsheet and how do I use it?

• Do I really need to complete one of these spreadsheets?
• I don’t know how to use Google spreadsheets…where can I learn?
  
  
• Do you have a spreadsheet template I can use? 
  

• What should I enter for each of the values – I’m not sure of all my costs or how many sales I will get?

• What if my spreadsheet looks awful, and says I’ll be losing money?

What exactly is a financial projection spreadsheet and how do I use it?

A financial projection spreadsheet is a tool to help you get an idea about whether your business could be profitable, or whether it looks like it won’t be.

The important thing with this spreadsheet is that it’s just a guess.  This spreadsheet won’t predict the exact future, it’s a tool to help you get a reasonable guess. 

A spreadsheet, if you’re not familiar, is a super cool type of document that makes live calculations for you. For example you might say you have a $12 product and think you can sell 10 of them. The spreadsheet will calculate your revenue for those 10 sales, at $12 each, as being $120. Then if it costs you $6 per item to make, the spreadsheet can calculate your net revenue as being $60. And so on. You can set them up to be very complicated and perform all kinds of amazing calculations that give you insight into your finances.

Google provides a free spreadsheet service called “Google Sheets”. Anyone with a Google account can make, edit and share spreadsheets for free.

Do I really need to complete one of these spreadsheets?

You’ll need to decide between the types listed in question above, typically the type of business you have will help determine the type of marketing. For example if you have an online business, you will probably run online ads, and work on getting your website found and listed on Google (this is called SEO or Search Engine Optimization).

I don’t know how to use Google spreadsheets…where can I learn?

YouTube has all kinds of excellent videos on how to use Google Sheets… see them here. You should be able to learn to use the spreadsheets in less than an hour. 

Do you have a Financial Projection spreadsheet template I can use?

Absolutely! Here’s a link to a Google spreadsheet you can use. But please note: you will need to “SAVE A COPY” for yourself in order to edit it! Instructions are all there for you – here’s the spreadsheet file. 

What should I enter for each of the values – I’m not sure of all my costs or how many sales I will get?

You just need to make your best guesses. Talk to mentors or business associates or friends with experience who can guide you with your guesses. This spreadsheet won’t predict the exact future, it’s a tool to help you get a reasonable guess.

What if my spreadsheet looks awful, and says I’ll be losing money?

It’s a bit of a blessing in disguise. The good news is that you found out your business idea might not be as solid as you thought and it might fail. So now you have learned this without risking all your time, money and energy!

What can you do to fix it? Look at your costs and your expenses and ask “Where can I trim my spending? How can I lower my costs?”  Likewise, look at your revenues and ask “Could I raise my prices? Could I find more customers? Could I expand my product line to offer more options or to upsell more to my customers?”