Clear the Uncertainty when Looking for Funding

As an Entrepreneur it is only natural for you to be outrageously optimistic about your business and the future. When looking for funding you want to show your investors that you can grow their money and provide huge returns for their investment (ROI). However, you know that any projection you make is your best guess.

What you want to show is a hockey stick projection of sales because that is what it will take to make the triple digit returns in 5 years for your investors. But how often have you got your investors rolling their eyes when they see that hockey stick curve? You know your projections are achievable but how do you convince your audience? Remember that your investors are basically interested in the size of their returns and the likelihood of getting those returns.

One way to get them to believe in you is to qualitatively describe your marketing and operations plans and convince them that your stellar background makes you ideally suited to get you there. An alternative is to convince them with numbers and include the element of uncertainty. You can tell your audience that you know that forecasts are simply best guesses. If you could predict what happens in the future you wouldn’t be standing in front of them. Instead, you have taken the guesswork out of the equation by putting ranges on the future estimates. For example, you have estimated that you would sell between x and y during the first year and y and z in the next year. Likewise you have put ranges on all other major variables as well and used a computer model to tell you what to expect as your net income.

You would make a powerful statement if you showed them a chart that displayed a distribution of their returns from lowest to highest. That way you can tell your audience that at the worst case they would make the lower end of the range if they invested in your business and at the best case they would make much much more. This would prove that you are on top of your game in understanding the uncertainties that face the business. This is another way of saying that you know the risks facing the business and have integrated that into your business plan. Perhaps then they would not roll their eyes when they see your aggressive projections because you will also show them both the aggressive and realistic side of the future.

A tool like Crystal Ball makes the above task easy. Contact me to learn more about adding uncertainty to your forecasts and using tools like Crystal Ball.