Startup Funding Espresso -- Bottom-up Forecasting
Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. There are two approaches to financial forecasting for startups. The first is top-down forecasting. The second is bottom-up forecasting. Bottom-up forecasting uses the company\u2019s historical data for cost and sales. It takes a micro view and focuses on the core drivers in the business.\xa0 Through experimentation, the startup learns the cost of sales and marketing through various channels.\xa0\xa0 Having sold some units of the product will guide the revenue forecast based on the sales funnel and the sales resources available.\xa0 The bottom-up approach may generate a forecast that looks weak to an investor.\xa0 You may add your growth initiatives in to show what will drive the growth upwards past the organic growth rate.\xa0\xa0 The initial growth (say 1-2 years out), comes from the current state of the business, while the future growth (say 3-5 years out), comes from your growth initiatives. Make clear your assumptions in the spreadsheet.\xa0 Your thought process and approach will weigh more heavily than the numbers themselves.\xa0 Include attributions for market research such as websites, news articles, and market reports.\xa0 Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.Let\u2019s go startup something today.-----For more episodes from Investor Connect, please visit the site at: Check out our other podcasts here: For Investors check out: For Startups check out: For eGuides check out: For upcoming Events, check out For Feedback please contact info@tencapital.group