TUTORIAL: HOW TO FIX YOUR MASSIVELY FLAWED FINANCIAL PROJECTIONS FOR ANGEL INVESTORS – ANGEL AUDITS
Robert Lee Goodman
"I Help Startups Start & Stay Started." ?| I Help Startups Plan, Fund & Implement | Funding Network: 4.5K Angel Investors/4K VC/1K Family Offices – ALL 9.5K of Whom Know Me. "Ready For Prime Time" for YOUR Fundraising?
Your startup is in major jeopardy – both from not being able to raise your funding but also because you're going to run out of money and runway much sooner than you think – Making your business plan all but worthless.
All of this was probably caused by you making an early-on MICRODECISION that seemed so right at the time – and now it is JEOPARDIZING everything about the future of both you and your startup company.
The purpose of this video TUTORIAL is to teach you what you need to know so that you and your company are taken seriously once you change the driving assumptions for your financial projections so they are both achievable and believable – And acceptable in the eyes of prospective angel investors.
Be sure and watch this entire tutorial to the end because I'm going to cover over TWO DOZEN very specific items that you need to consider changing on your current financial projections before you show any of your documents to prospective investors!
Testing 1 2 3. Can you hear me now?
TURN ON YOUR SOUND or you will MISS OVER 85% of this content-rich video tutorial which includes over two dozen very specific, pivotal suggested changes to your current financial projections!
(By the way, you might find my first attempts at AI Art interesting. All but a couple of the images in this Tutorial were created from scratch by me playing around with free AI art creation software called Easy Diffusion. A long way from perfect – but not too bad for going from zero knowledge to these images with less than two days of very enjoyable learning.)
Now back to our regularly scheduled program…The intense, gripping, cliffhanger drama about whether your startup company survives!
What I Learned from Reading Over 5,000 Business Plans and Financial Projections
Based on my 4.5 DECADES of raising investor capital from angel investors – and my review of more than FIVE THOUSAND business plans and their financial projections, I have seen uncountable mistakes that absolutely kill the company's chances for any success at raising investor capital.
More than 98% of those 5,000+ companies I just mentioned – totally missed the mark when it came to their business plan focus, their business model and almost all of these left out three critical slides in their pitch deck.
This extensive data set may mean that you too probably have a 98% risk of having massively flawed financial projections!
I'm not talking about plus or minus 10% wrong. I'm talking about massively wrong, critical, pivotal driving assumptions that are going to be quickly and almost automatically and rightfully rejected by most or all Angel investors.
And here's the first rub: Because the angel investors are smart enough and experienced enough to recognize the bad numbers means that they are probably right.
Here's the second rub: If you are depending on these projections to plan the future of your startup company and its cash flow and its bank balances and its runway, every one of those critical numbers is going to be wrong and you're probably going to run out of money a whole lot faster than you expect.
However, one outrageous set of financials came across my desk last week that compelled me to stop just about everything that I was doing and produce what I hope is going to be a pivotal tutorial and give back to so many other entrepreneurs who are struggling with their own startup companies.
(Details about this outrageous set of financials are described in the video.)
Too Many Companies Make a Bad Microdecision That Ends up Killing Their Company.
The major problem is that most startup companies mistakenly try to save money by getting their business plan and financial projections done by hiring the cheapest possible talent.
I get it. Money is tight for almost every startup company and you want to make your cash last as long as you can. So you make a quick microdecision to go with the cheapest bid you can find to get that part of your fundraising package checked off the list. Besides, those are just a bunch of numbers that you may not understand anyway.
All the while, you do not realize that this one “simple” microdecision is going to have dire and lethal unintended consequences that will probably kill your company – just because you wanted to save a few dollars in the worst possible place.
Cheap talent has learned how to use cheap software and templates to spew out dozens of pages of projections to be quickly slapped into a business plan.
The problem is that this cheap talent, almost always, has zero concept of the fundamental metrics associated with your niche and your industry. and no insights into the near infinite multitude of hidden nuances required to actually start and run a company – Including what is required to actually raise Angel Investor capital from real human beings.
Often, this cheap talent chooses driving assumptions that generate projected, desired metrics – including "hockey stick" revenue gains with absolutely no concept of what's required, expense-wise, personnel-wise, timing-wise, cash balance-wise and execution-wise, to generate those results.
Cheap "Talent" Has NO Experience Base On How To Drill Down On The Numbers
Each company's unique and specific business model IS different.
Cheap talent can't validate the revenue stream or understand what will be required for actual startup costs (including all the money it takes to raise the money), cost of goods sold, personnel – and the realistic operating costs inherent to each company's specific needs – Including reality-based estimates of what it will actually cost for marketing and advertising to drive revenues that come close to matching the revenue numbers in the business plan.
All of these bad driving assumptions by cheap talent add together to create massive shifts of hundreds of thousands of dollars, if not millions of dollars, of unaccounted detrimental changes to both revenues and operating costs per year.
Angel investors are almost always experienced enough and smart enough to very quickly spot garbage driving assumptions and garbage projections. Not only do these angels lose all confidence in every number in your business plan – but they also immediately lose all confidence in you and the rest of the management team for believing that the garbage is really valid – or worse still, believing that you and the management team know the numbers are bogus and are still trying to sell the deal with intentionally bogus numbers.
The upshot: Prospective angel investors will reject your deal – and will not waste any more time on your deal even if you come back with what you believe are corrected numbers.
You almost always just have one shot with each prospective investor.
Don't blow it!
Your Runway of Existence OR Your Runway to Extinction
The incredibly short runway that you see in the image is real and is part of what is considered to be THE most dangerous airport in the entire world: Tenzing-Hillary Airport in Lukla, Nepal which is the gateway to Mount Everest.
Here, when you run out of runway, you fall off the side of a very tall mountain.
You face the same terrifying dilemma with your startup company and its Runway of Existence – Or its Runway To Extinction.
You may not consider yourself a math person or someone who totally understands financial statements, but you have got to understand these simple formulas because your startup company's existence depends on them.
Your company’s Runway of Existence (In Months) equals Cash Reserves divided by Monthly Negative Cash Flow.
This calculation equals how many months until you and your company TOTALLY run out of money.
领英推荐
If your five-year financial projections are wrong – then your assumed Runway Of Existence is REALLY wrong.
Which probably means that it's REALLY your Runway to Extinction!
Garbage In. Garbage Out.
Garbage projections based on garbage-driving assumptions rarely get funded.
If the driving assumptions for your five-year financial projections are bad or bogus, the formula-derived projections are at least equally bad or bogus.
And EVERY number that relates to your monthly cash flow AND your monthly cash balance is wrong.
All of this also means that your calculation for how much investor capital is needed is completely wrong.
This means even if you're successful raising the capital that you THINK you need, you're probably going to have days and nights of panic once you realize what you promised investors does not match reality.
Angel Audits: A VERY Affordable Solution for These Fatal Self-Inflicted Wounds By QUICKLY Fixing Your Massively Flawed Financial Projections Now.
As you have seen, these self-inflicted wounds are almost always fatal to any future for startup companies.
My goal is to offer startups a VERY affordable, no-brainer solution that can GREATLY improve your chances for success when raising your Angel Investor capital with my Angel Audits Service.
Even if you previously made that flawed microdecision by hiring inexperienced cheap talent, use Angel Audits to help you fix your massively flawed financial projections BEFORE you pitch even one more prospective Angel Investor.
This also means that you need to immediately stop ALL your fundraising efforts since ALL documents could be impacted by changed financial projections! The last thing you want is to have consistency mistakes between all your documents and your financial projections. This consistency oversight is a deal killer for a lot of angel investors.
Watch the ENTIRE Video so You Don't Miss Any of the More Than Two Dozen SPECIFIC Recommendations to Fix Your Financials!
My heartfelt hope is that this video tutorial makes its way to the eyes and ears and brain of some of those entrepreneurs with all those organs open enough to benefit from the dozens of insights I've shared in the tutorial about raising investor capital that I've learned during the last 4.5 decades.
Details and Pricing at: AngelAudits.com
Wishing you stellar success with your startup and your fundraising,
Robert
Robert Lee Goodman, MBA
CEO & Chief ImpleMentor
CEO RESOURCE LLC?
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My 21 K+ 1st Level Connection LinkedIn Profile:?Linkedin.com/in/robertleegoodman
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Elevator Pitch: "I Help Startups Start and Stay Started With My Services - And My Network Of Angel Investors."
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PS: For the past 30 years, I have focused solely on helping startup and emerging companies with their business planning, fundraising, implementation and mentoring of the CEO and other senior executives. During that time, I've already directly helped THOUSANDS of diverse startup companies and their CEOs, in 49 of the 50 states, in more than 72 countries, on six of the seven continents and in more than 200 different industries. (Special discounts for the first client in either South Dakota or Antarctica!)
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PPS: My Chief ImpleMentor Service is uniquely and specifically geared to helping my clients with ALL 53 Milestones required for a startup company success – from that first glimmer of a concept to raising funding for your startup company. Check out:
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1 年Robert Lee GoodmanThanks for the valuable insights and guidance. A must-watch for startup founders navigating financial challenges. Check DM.
Corporate Exec Turned Entrepreneur, Multi-Unit Franchise Owner | Franchise Consultant, Helping Others Do the Same | Own Six Prosperous Franchises | Leveraging Decades of Experience, Guiding People to Franchise Ownership
1 年Valuable insights, Robert Lee Goodman! What are some common microdecisions that startup founders often overlook, and how can they make more informed choices to ensure the long-term success of their ventures?