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Financial Projections for Small Business Startup.

How to create the Financial Projections or Proforma to help you start a successful and profitable small business.

Henry Lopez - Entrepreneur

This episode is about creating your Financial Projections for your business plan.

Join Henry Lopez for the next Financial Projections for Small Business Online Workshop.

Financial Projections, or a financial proforma, is perhaps the most important part of a Business Plan. It’s the only way to project if your business model has the potential to be profitable, and if the business is worth the investment of your time and money.

On this episode Henry takes you step-by-step through the creation of effective Financial Projections.

Henry Lopez is a serial entrepreneur, small business coach, and host of The How of Business podcast, with over 35 years of diverse business experience, including successful careers in information technology, sales, sales training, real estate, and business ownership. He is currently the co-founder of Levante Business Group (helping you start, run and grow a small business), co-founder of iTopIt (a self-serve frozen desserts restaurant in Colorado Springs he sold in 2021), former co-owner of Wild Blue Car Wash (an exterior-express car wash in Colorado he sold in 2019), co-founder of L3 Destinations (a Travel Consulting business co-founded with his wife), and a minority partner of Office Evolution of Plantation, Florida (a coworking and shared office space franchise business).

Financial Projections Workshop

Join Henry Lopez for the next Financial Projections Workshop. By the end of the workshop, you will have completed the first draft of your financial projections for your business!

Financial Projections for Small Business Startup episode topics:

  • It’s just a projection! While it’s critical, it’s important not to lose sight of the fact that these are just projections. We can’t foresee every possible scenario – like what might happen to the economy, the impact of another pandemic, government regulation changes, market shifts – all of these things and more, which are out of our control, can have a significant outcome on the actual performance of our business. BUT, that is not a valid reason to skip or discredit the value of projecting your financial performance, and validating, at least on paper, that you can make a profit with your business model and that it’s worth your investment.
  • How do I create the financial projections or proforma for my small business idea?
  • What should Financial Projections for a small business start-up include:
    • Projected P&L (also called Proforma or Income Statement)
      • Year 1 by Month
      • 3 to 6 years
    • Break Even Calculation
    • Debt Service – your monthly and annual payment on any loans you incur to start the business.
    • Working Capital Calculation – how much cash reserves do you need to get you through the break-even point of your business startup. You also need to consider your cash flow needs and your own savings to cover your personal expenses.
    • Start-Up Expenses
    • ROI Projections
      • When will you get your cash investment back?
      • Rule of Thumb on Return On Investment (ROI).
      • The benefits of leverage!
    • Robert Kiyosaki – author of “Rich Dad, Poor Dad”
    • “I use debt to buy assets. Most people use debt to buy toys and liabilities.”
    • “Good debt is a powerful tool, but bad debt can kill you.”
  • Where do you get the numbers?
    • Extensive research.
    • Get quotes for services (i.e. Insurance, Alarm, Internet, Phone).
    • Industry Groups
    • Suppliers/Vendors/Distributors
    • Coach or Mentor
    • Franchise – a franchisor can provide guidance on financial projections.
    • Lenders
  • Common Mistakes:
    • Overestimating your revenues.
    • Unrealistic and untested pricing.
    • Not including all your expenses.
    • Not calculating working capital.
    • Not including debt service.
    • Not determined ROI.
    • Unrealistic about what the business will pay you and by when!
    • Not getting validation and input from a coach or mentor.


Free Download: Financial Projections Spreadsheet

Books mentioned in this episode:
[We receive commissions for purchases made through these links (more info)].

Other Related Episodes:

Episode 382: Small Business Plans

You can find other episodes of The How of Business podcast, the best small business podcast, on our Archives page.

Frequently Asked Questions – Financial Projections:

  • Q. Do you have a financial projections example?
    A. Yes, you can download a financial projections template for free: Financial Projections Spreadsheet . Use this template and sample to help you create your business start-up projections or proforma.
  • Q. How do I calculate financial projections for startups?
    A. Calculating financial projections for your small business startup begins by determining the product or service your will offer your consumers, and at what price. Then you must project how much capacity and ability to sell you will have and project your revenues.
  • Q. Do I need financial projections for my business plan?
    A. Yes, we recommend that you complete basic financial projections at a minimum to help you validate if your planned business model has the potential for be profitable and scalable.
  • Q. Do you have a business plan financial projections template in Excel?
    A. Yes, the Financial Projections Spreadsheet is in Excel format.
  • Q. Do you teach people how to make financial projections?
    A. Yes, if you want to learn how to complete your financial projections we invite you to consider attending the next online Financial Projections Workshop.


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