Entrepreneurship, Second Edition

8.8. CONCLUSION

Going through these exercises allows you to construct a realistic set of pro-forma financials. It's a challenge, but understanding your numbers "cold" enables you to articulate your business to all stakeholders, so you can build momentum toward the ultimate launch of your business. Just as we said in the last chapter that the business plan is a live document, so too, are the financial statements a set of live documents. They are obsolete immediately after they come off the printer. As you start your launch process, you can further refine your numbers, putting in actual revenues and expenses as they occur, and adjusting projections based on current activity. Once the business is operating, the nature of your financial statements changes. They not only help you to assess the viability of your business model but also help you to gauge actual performance and adjust your operations based on that experience.

Although most entrepreneurs tell us that drafting the financials induces some pain, they also concede that going through the process is gratifying and rewarding. They learn to master new management skills, build their business, and protect their investment. So dig in.