What is the importance of financial projections in your pitch deck?
Financial projections and models still play a crucial role in business plans and planning. You know you need them, but what should they include? What is the purpose and benefit for you and others? How might they have the power to rocket or wreck your business?
What Are Financial Projections In Pitch Decks?
Financial projections are a key staple in every pitch deck. No matter whether you are crafting an extensive traditional pitch deck, a modern one-page business plan, or a trendy slide style plan, there should be some basic financial projections. If not for others who might read it, at least for yourself.
Financial projections show the potential of the business. They answer questions like:
- How much can you make?
- Is this even a business idea worth pursuing?
- Is it profitable enough to be sustainable over the long run?
- What will be the ROI on your time?
- What types of investors or buyers might there be for this business?
- How long will it take to breakeven?
- How much do you need to sell to hit your goals?
When figuring out the importance of financial projections in your pitch deck, keep in mind that your financial projections are forecasts that layout what could happen, and what the potential is for this venture given certain circumstances.
Remember that storytelling plays a key role in fundraising and you will need capital to scale things up. This is being able to capture the essence of the business in 15 to 20 slides. For a winning deck, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
What Numbers & Elements Are Included In Pitch Deck Financial Projections?
How much you need to include depends on what stage you are at and what you are using this business plan for.
If you are still in the exploratory stages of creating a business, then your financial projects will probably be very simple. Especially if this is your first startup business and you haven’t done the detailed math yet.
As you are thinking about the importance of financial projections in your pitch deck, remember that you might just start with:
- Number of customers
- Amount of revenues
- Profit margins
- Gross profits
These projections will typically cover the first 12 months (sometimes by month), and then years 2 through 5.
If you are already in business, then you have real data and numbers you can include. You can benchmark your forecast against the current reality and past performance. You can layout out realistic revenues and all of your fixed and variable expenses, and net profits or losses.
What Should Financial Projections Look Like In A Pitch Deck?
If you are being detailed, and are working on a comprehensive business plan for your own knowledge, then you may have some in-depth breakdowns showing your costs, budgets, research, and assumptions that culminate in your financial projections. This makes them real, not just an amateur guess.
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