Projections for a Web startup – 10 realistic ways to create them (Guy Kawasaki)

Your Web AddiCT(s); have been asked to forecast our financial projections for the next 5 years by some people.

In 5 years the 2010 world cup would have come and gone in South Africa and unless we make a change, AIDS will still be running wild in our beautiful country and the rest of the developing world. Happy Aids days to all. My name is not Manto, but you can continue reading about how to create financial projections if you wanto.

Apart from consulting with the other AddiCT(s); we also look at what the rest of the world is doing ..

The world is running amok with entrepreneurs pitching every sort of Web 2.0, social networking, user-generated-content startup. It’s the attack of the bull-shiitake startup projections, so I’m losing my hearing; there’s a ringing in my head, and I get dizzy every once in a while. Before the world implodes (again), here is a top-tenish list of ways to create realistic projections in this Dotcom 2.0 world.

So here is the list of Guy Kawasaki’s 10-ish ways to create realistic projections for your start-up:

1. Under-promise and over-deliver .
2. Forecast from the bottom up.
3. Don’t go too far out: twelve to eighteen months is the maximum
4. Plan to re-forecast every 3 months.
5. Don’t let costs get in front of revenue.
6. Collaborate with your investors.
7. Think in terms of per-unit profitability.
8. Plan for marketing costs.
9. Create a one-page report and stick to it.
10. Never miss a cost projection.
11. Think big.

I have highlighted point 3, Do not go to far out: 12 to 18 months is the maximum as one of the questions the VeloCITI applcation form assk for 5 year projects. We sucked our thumb and went 5 years ahead with our financial projections for one of our projects but according to Guy Kawasaki:

Anything beyond that is a waste of everyone’s time because you really don’t know when you’ll ship, and you can only fantasize about customer adoption. If you’re into five-year forecasts, go to work for a nice consumer packaged-goods company that’s been around for fifty years.

Read more detailed info about realsitic ways to create Projections for Web startups at Guy Kawasaki’s blog post: The Art of Projections in a Dotcom 2.0 World or about the Cape IT Initiative’s Business acceleration Program VeloCITI (not the VW chico)