This post will bother you...

#Startups are lazy when it comes to forecasting.

And it hurts them tremendously down the road.

Here’s how ⬇️

Presenting your financial and marketing forecasts has nothing to do with:

▫️ Your ability to predict the future
▫️ Quantifying your ambition

It has everything to do with:

▫️ Your ability to prepare
▫️ Your logical and reasoning capabilities
▫️ Contingency planning

Kobe Bryant didn’t get nervous during crucial moments of games because he had practiced or simulated clutch scenarios tens of thousands of times… Nothing surprised him.

Similarly, a #VC wants to see that you are totally prepared for moments of favorable and unfavorable chaos:

▪️ Your product demand skyrockets
▪️ You burn cash too quickly
▪️ You crush your sales
▪️ You lose a key client or partner

How do you adapt to the unexpected? Have you prepared? Are the scenarios and counters documented?

In your forecasts… hopefully.

You should #forecast:

▪️ Financial performance
▪️ Market demand
▪️ Sales / BizDev pipeline performance
▪️ General market forces or conditions — political, economical, social, technological, and environmental (PESTE) as applicable to your business

By forecasts, I do not mean budgets.

* Budget shows how you will allocate dollars ➡️ discipline.
* Forecasts show the results you plan on achieving ➡️ execution.
* Yet #budget and #forecasts mean nothing if you and your team aren’t willing to be accountable.

Many #entrepreneurs — including seasoned professionals who are first-time Founders — present a single forecast to VCs.

This is a mistake. 👆

Other entrepreneurs present 3 scenarios in their forecasts:

▫️ Best case
▫️ Worst case
▫️ Likely case.

This is too light for your data room. 👆

At my fund, we forecasted 1,000 financial and market scenarios when we were serious about a startup.

Yes, that is One Thousand simulated scenarios.

1K.

💯 + 💯 + 💯 + 💯 + 💯 + 💯 + 💯 + 💯 + 💯 + 💯

Overkill? Maybe.

But (1) it didn’t take significantly longer to run or analyze more scenarios and (2) the exercise was quite valuable.

It made us better collaborators, sparring partners.

Because just as much as we expected the Founder to be prepared for any possible scenario or outcome…

… WE wanted to be prepared for any possible scenario or outcome.

And the last thing any founder or VC wants is to be blindsided with a crippling problem.

▪️ Mitigate the stress beforehand.

▪️ Prepare for your clutch moments.

▪️ Forecast with critical thought, intention.

How do you approach your forecasting?