Magical presentations. Fast. Easy. Beautiful

View Original

Words and number consistency

It is impossible to make a correct 5 year business forecast in an investor pitch. But your financial projection is not really a forecast, a prediction of the future, it is a picture made out of numbers. "If our company will be successful, this is what it could look like".

Mistake number one is to make the projection ultra precise with 5 digits after the comma. It is just a guess, so a year 5 revenue number of $99,234,318 is not more credible than ~$100m.

But oversimplifying is not right either. The fact that you are for sure going to be wrong does not mean that you simply take 1% of a big market number to get to the year 5 scenario.

The trick is to make the words/visuals in your presentation consistent with your financial model. You are going to sell to millions of individual customers, drive the model that way. You rely on 5 big telco operators, put it in. SAAS company with recurring revenues? Model it. One-off perpetual licenses, use it as the basis of your model.

Teaching investors how the business works is more important than getting the point estimate right.