How Do I Do A Pro Forma? A Startup Founder's Guide

May 23, 2016

One of the toughest parts of starting a business for me was doing financial projections and a pro forma. I had literally zero finance background, and the most I'd ever used excel was when I was graphing data for a research project.

Luckily, a pro forma isn't really that complicated. The hardest part is just making financial projections that are relatively meaningful and useful.

It all boils down to the assumptions you make. When you do financial projections for a business model, you have to know exactly all of the things you need, you have to know when you will need them, and you have to know how much they will cost.

Thanks to JP James and the Entrepreneurs Society for teaching me all of this as I was in the early stages of building Better Walk.

I've also made a very simple financial projections template that I use to vet out new ideas and products. This is also the skeleton of the financials I use to run Better Walk every day and aid in decision making and fundraising.

You can download my financial projections template for startups here.

Pro Forma Page

For the Pro Forma/Overview page I usually start out with an excel document, and I start with the following categories on the first page:

  • Revenue
  • Cost of Goods Sold (COGS)
  • Gross Profit
  • Total Expenses
  • Total Costs
  • Net Profit
  • Cash On Hand

These categories (except cash on hand) are what I show on slide decks when I pitch to investors. Cash on hand changes too often to put into a slide deck.

Tabs for Expenses

I then list out categories of expenses that I will incur in the business model that I am modeling out. These are almost always:

  • COGS (breakdown)
  • HR
  • Inventory
  • IT
  • Legal
  • Marketing
  • Sales
  • Operations

Within each expense category, you then list out every single expense you will occur over the time period of your pro forma.

Expenses, Details, etc.

The details of each individual expense are based on your individual research and assumptions. I recommend making 3-5 years of projections and doing it on a month to month basis for your records. This worked for us in the fundraising process.

At this point, use the template I've provided and you should have a relatively easy time filling in the blanks. Make sure you talk to experts in your field so you full understand what expenses are upcoming, there's nothing worse than budgeting and getting to an inflection point and realizing you have to pay for twice as many things as you realized.

Comment below if you have any questions and I'll try to help out!