Proceedings of The 15th International Conference on Modern Research in Management, Economics and Accounting
Year: 2023
DOI: https://www.doi.org/10.33422/15th.meaconf.2023.03.004
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Navigating the obstacles of financial projections for start-ups
Junada Sulillari
ABSTRACT:
Being an entrepreneur can be a tough and rewarding experience at the same time. It is a long journey and in order to succeed it requires perseverance, patience, and willingness to deal with unexpected events. There are many challenges that a company, and especially a start-up can face and one of the most important ones is related to financial projections. Start-ups may face many obstacles while working on financial projections that may lead to false projections. Financial projections are a key factor that different stakeholders use to decide whether or not to get involved in the company. The aim of this paper is to make an analysis of the financial projections process of start-ups, to find some of the main issues that they face. This is explorative and interpretative research and is mainly based on secondary information. It is mainly based on a descriptive analysis. According to the findings some of the key issues that start-ups face regarding financial projections are: overestimation of sales; underestimation of costs; difficulties in considering all the risks that can impact the financials of the company; and difficulties in calculating the burn rate and break-even point. These factors were reflected in the way the company is seen by different stakeholders, such as potential investors. This reflects the importance of having accurate financial projections since it is one of the factors that can determine the future of the company. We aim for these findings to serve as a guideline for start-ups to obtain more accurate financial projections.
keywords: cash flow, expenses, financial projections, revenue