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Fortune Telling

Putting together financial projections that attract investors

This story appears in the September 1997 issue of Entrepreneur. Subscribe »

In every company's life, there comes a time when it mustlook into the future and try to imagine what its financialprospects are. Often this occurs right at the point when theproduct or service is fully developed but not yet launched.It's at this moment that most entrepreneurs--faced with theenormity and of evolving from a product development company toa and marketing giant--seek outside financing.

Naturally, the first question would-be investors ask is"What do your look like?" Thereason investors ask this question is simple: Companies are valuedin relationship to their earnings. Hence the future value of theinvestment depends on how the company performs down the road. As aresult, access to growth capital depends in large measure on theentrepreneur's ability to paint a credible and compellingpicture of his or her company's financial prospects through aprojected income statement.

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