Successfully starting a new business requires an understanding of your market, an innovative product, and a long-term vision for the health of your company. When preparing a marketing strategy and assembling a talented team, new entrepreneurs should also invest in comprehensive financial projections, which can offer a detailed map of success. Understanding the long-term viability is crucial for identifying issues before they arise, securing funding, and predicting the long-term viability of your investments.

What Is a Financial Projection?

A financial project is essentially an estimate of your revenues and expenses, based on current conditions and other factors. These reports can be highly detailed, breaking costs down into specific categories, predicting the return on certain investments, and establishing benchmarks for sustainable growth. Most new entrepreneurs will need a financial projection for at least the first year, but a plan covering your first three to five years is usually more beneficial.

The Importance of Accurate Projections for New Businesses

Accurate financial projections prepared by a skilled professional are particularly important for new entrepreneurs, especially if you apply for loans or solicit investments. Lenders and capital investors will rely on these projections to determine whether your business has a strong likelihood of success.

Financial projections also allow you to translate the long-term goals of your company into concrete goals, establishing clear benchmarks for success. This can be especially important for new businesses who don’t have previous years of revenue to which current income and expenses can be compared. Understanding where you should be allows you to respond to shifts in the market and adjust your expectations to maximize the profitability of your venture.

As one of Texarkana’s most prominent certified public accounting firms, Erie & Associates, P.C. offers an extensive array of customizable services to businesses throughout the area. Whether you need financial projections for a startup or payroll services for an established business, you can rely on their team for dedicated service and accurate results. To discuss your needs and schedule a consultation, visit the website or call the office at (903) 792-6651.