I read an article in the NY Times about why one CEO, the article’s author, tends to aim too high on his financial projections. I thought it applicable to share here.
Here are some excerpts from the article, Why I Tend to Project a Little High, that I particularly like and agree with:
“Investors — especially venture-capital investors — demand aggressive “hockey stick” growth curves for revenue and profit. They want big multiples, and they want them in short time frames. They want to know what’s being targeted and what the chief executive believes is achievable. If they don’t see optimism, if they aren’t buying into a dream, they are reluctant to invest.”
“We typically prepare our financials, or budgets, for the following year a few months before the current year ends.This is extremely difficult for a fast growing business.”
“Aiming high is a major motivator and can create growth — perhaps not as much as you projected but still substantial.”
To read the entire article and view additional thoughts on high financial projections by Tom Szaky, CEO of TerraCycle, go to Why I Tend to Project a Little High.