In speaking with two veterans of the business world this week, discussion settled on the work that goes into starting a business. Specifically, we talked about a complex spreadsheet that outlines projected cash flows and expenses — both one-time and continuous — to estimate potential profits. As I’ve said before, math isn’t a strength of mine (neither are spreadsheets) so it was overwhelming.
With a finished spreadsheet, a prospective entrepreneur will know whether his dream company will make a profit, and how many months or years it would take. Kind of. The whole thing is based on projections, so said entrepreneur might estimate cash on hand (money coming into the business) to double in three months, but it’s still just an educated (maybe overly hopeful) guess.
The experts said they advise spreadsheet tacklers to estimate high on expenses and low on cash on hand. Ideally, their projections will be slightly off, to their benefit.
<Shakes head vigorously>
Anyway, Prairie Business covers startups and entrepreneurs extensively, so it was nice to see a little bit of the prep work involved in the beginning phases — when the idea is either scrapped or expanded. It’s not simple.
Clearly, people who start their own businesses need exemplary math and organizational skills. I salute you.