Emergic: Rajesh Jain's Blog

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Need for Financial Planning

June 13th, 2007 · 1 Comment

Basab Pradhan writes:

Great products, and anchor customer wins are the things that hog the limelight with startups. But in my opinion, sound financial planning is the unsung hero of the early stage of a companys life.

Sound financial planning can mean the difference between survival and an early demise. More commonly, an absence of financial planning means you have to raise a round of funding before you expect to do soand that is never optimal for a young company.

Your primary tool is your budget. The most important purpose of a budget is to forecast cash flows. It is easy to become lax about forecasts, especially beyond the next quarter, since there is so much uncertainty in the early stages of your business. You might be asking yourself: How do I forecast revenue when I havent sold anything yet!? But the absence of revenue is not a good enough reason to leave a revenue line out of your budget.

Tags: Management

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