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Listen in! Pick up some expert advice to a reader's question that we selected from CyberSchmooz.

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Featured Biz Question

I've read a lot of info on business plans...The one thing I'm not sure how to do is projecting the sales and profits of a self-service-oriented business idea I have. In all my searching, I cannot locate a similar business in the civilian sector (nonmilitary) that I can use as a "guide".....anyone have any advice?

Thanks in advance, JT

Answer from our Guest Expert Kent Capener of Capener Consulting

Profit and Sales Projections

Well, JT, first, make sure that if you're “guided” by what others do, don’t let them guide you out the back door and into the dumpster! You wouldn’t be the first one to do that, so let's see what we can drum up for you on the right road to your self-service biz idea.

Two Ways to Cook Up Projections

JT, you cook hamburgers the same way in Idaho as you do in Bulgaria. One might be on a stove and the other a campfire. No matter. The point is the process of preparing business projections is the same, for the most part, no matter the location or the business type. The format for doing so is governed by basically two conventions: Pro Forma and GAAP (Generally Accepted Accounting Principle) projections.

GAAP projections contain, at a minimum, the following:

  • Income Statement, Income Statement Analysis, Balance Sheet;
  • Cash Flow, Revenue, Cost of Sales, Volume, Personnel Costs, Summary Financials; and
  • Equity/Debt Analysis, Marketing Budget, General and Administrative Expenses.

GAAP projections are most commonly (and highly recommended to be) monthly for years one and two; quarterly for year three; and annually for years four and five. 

The most common use of a Pro Forma is for a one-year period. Pro Forma literally means document. It really isn’t a financial term, but has taken on those connotations.  Pro Formas are generally not as extensive as GAAP projections; however, they often do contain some of the same elements.

Don’t worry that you can’t find a guide out there. You can make your projections as accurately and as professionally as anyone else. To put it into military terms, since you allude to your involvement, it’s like learning the theory of taking a hill. You apply the same theory to each and every different hill.

It’s the same here. And here’s how: continued

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About the Expert

Kent Capener
Owner of Capener Consulting

Kent Capener

Kent is an expert on marketing; advertising; print, radio, and TV production; biz plan writing; trade show services; and direct response television. He relishes helping start-ups grow. more