RSS at Feed BurnerDon’t be Conservative
I was at InvestMidwest this week and saw some really exciting companies. I was impressed by the presentations and it seems many of the presenters were either coached on what their presentation should include or they just intelligent entrepreneurs that knew what needed to be done.
Most presentations I see include one aspect that is so common it has started to frustrate me. It happens when the presenter gets to the part of the presentation about projections. They start talking about revenue projections and they present the figures, but say that they believe this projections to be “conservative”.
I don’t know why it frustrates me, but apparently I am not the only one that feels this way. Fortunately, I only heard one entrepreneur (out of 12) claim their projections were conservative. And, upon hearing this, I saw another investor look at his buddy and smile.
Why shouldn’t you use the word “conservative” when talking about your projections?
First, when coming up with projections, especially if you are a start-up, it is extremely hard to predict what you could actually do. But you should do whatever you can to support your projections. So don’t try to say you just need to get 1% of a gigantic market in order to experience huge success. Talk about what aspect of that market you expect to penetrate. But since it is so hard to predict, you probably don’t know what is conservative and what isn’t.
Second, why would an entrepreneur that is trying to “sell” the concept of his business and raise money quote conservative numbers? It is unlikely you would, so don’t try to make the projections look bigger than what you actually believe.
Finally, even if your numbers are conservative, don’t use the word “conservative”. Don’t qualify your projections at all or maybe use a different word like “realistic” if you actually believe those projections are within reach.
on October 1st, 2008 at 12:10 am
This is interesting - Thanks for posting this blog. When pitching, I have often used the term “conservative” when talking about our revenue projections- but mainly because doing research in our market we see a broad range of revenue potentials and after taking all research into account - we tend to air on the cautionary side of not delivering too high of projections as we do not want to “over-promise.” I feel after getting some real numbers under our belt opposed to just extensive market research we can give accurate numbers and can drop the word “conservative.” But after this article, I may change my approach. Thanks!
on July 24th, 2009 at 8:04 pm
Thank you for the post. When pitching my projections, I do not use the word conservative, but I do use the 1% of the market as a projection in the first year. The reason I have done this is because I was told by an Angel funding group that they do not want to see “pie in the sky” projections. In my market, anything over 1% would appear to be “pie in the sky” number at least in the first year.