I want to end up on the classic mistakes, the classic mistakes that entrepreneurs make when doing financial projections.
First, classic mistake on under revenue. Overestimate the speed at which you're going to get revenue.
Often it takes a long time. Sometimes you see that we having this incredibly optimistic revenue growth in year four or five and six.
That doesn't mean anything. You can't build a business on all the revenue coming in for projects unless you have a clear plan of what that is.
If you're a biotech company, that's the way it works. That's fine. But you sort of want to remain realistic over the long horizon.
You often miss costs of generating sales, especially if you are having a sales fall.
Think of all the expenses you're going to have to pay your salesforce.
By the way,
that could be you yourself travelling around the country or doing lots of phone calls and going to fancy dinners just to get that first sale.
Don't forget the cost of generating the sale and and then distinguishing between listed and actual prices because often the list,
the price is not the one that you're going to get on the cost side.
Classic mistakes. We forget the cost of running the business.
We think that all our assets are utilised that capacity right at the start when in fact they're not.
And often we get the labour costs wrong, especially forgetting all the benefits and training costs and bonuses.
So these are these are classic mistakes that I see people making on the cash flow side.
And I briefly touched on it, but it really is important. People underestimate how much work it is to get paid.
That's to say, most of the time, say you're doing a contract business, you think you've done the work.
It still takes a month or two or three to chase down to get the bill paid.
You need to work that out into your cash flow statements. That is part of your financial projections.
The timing of cash flows underestimate the true cost of trade carried and and then underestimated the days of fundraising.
You don't want to start fundraising two months before you're running out of cash.
You want to do that 6 to 12 months before that.