[GuyBBY]

Good morning YE's

I was instructed by a business counselor to try and do the following:

Develop a 12 month cash flow with documented assumptions and summary year 2 and 3 plans

Now, before you say "is this kid seriously in business if he can't do this?", let me assure you, I can. My accounting background makes it fundamentally easy however my questions lie in the open-endedness of assumptions...maybe it's my personality (practically non-clinical OCD haha), but I am having trouble realistically putting numbers down for things that I cannot really predict just yet.

For example, we just got a vanity number, and after our revamp/redesign to go live in April, it will be on the site. (it is $1/mo + 4.9cents every min used) Should I just guesstamate and round up to play it safe...say "well I think we will be on the phone for about 3hrs total that month", and go with that figure just to have something down? I understand these are not "to the penny", but I don't want to have a drastic surprise (good or bad).

If anyone has attempted this before for an e-commerce business it would be great to hear your experience!

Thanks

G

[kwontemtek]

i would say about 95% of eCommerce websites fail because 1) they dont got a local establishment. Start local, then build up to your state/province, then go national, then international. When marketing and investing money to your website, make sure to market within your Local (small biz) State (medium biz) or national (large biz). Dont advertise or market nationally if your not a big business, you need to use the stepping stones for it to be effective. Skip it, and you will notice drastic difference in your exposure.

[GuyBBY]

Kwon-

Yes we are based in a very community-driven market and I have operated there as a gen. partnership thru and a bit after college, until this past year when I got incorporated as an LLC, hired a CTO, and now are ready to go bigger and better with things that local market told me they wanted to see and be able to use, etc.

So I got that down...I just get a bit "all over the place" when trying to think about the value of something that can't be predicted just yet. Maybe, what I should ask, is what resources fellow e-commerce startups used to see trends, stats, and estimates in other e-commerce businesses that were close in the same purpose.

Thanks

G

[ADVERTISE HERE!]

As a rule of thumb, when making cash flow projections, I go with the numbers that are best supported by the facts. Whether you go with one assumption over another, be able to support the assumption, at least to some degree, with facts and reason, and be able to provide a strong argument in defense of your assumptions. A good way to do this is to put yourself in the shoes of a potential investor, and ask yourself those hard questions - How did you come up with the numbers? Why did you assume them? What supports the assumption? Why one assumption over another, or in other words, why is this the most likely assumption?

[GuyBBY]

Thanks J,

I appreciate the insight and prospective.

Sidenote, when I get a chance I want to tell you about the ACN situation...made progress and looks like everything is going to work out.

Thanks

Guy

[ADVERTISE HERE!]

No problem at all.

In my opinion, the key is just being able to support whatever numbers you use. When you throw in first-year revenues of $5000 with a constant growth rate over the next few years of 50%, you can count on an potential investors asking why you made the assumptions that you did. Have some basis, be it market studies, data from comparable companies, etc. The numbers don't matter as much as your ability to back them up with facts and reason.

Keep me posted.

[GuyBBY]

Great J!

Are there websites out there that have data for industry figures/averages/numbers? Where you can select a flow like, E Commerce> Advertising>Classifieds> FACTS

Thanks!

G