Question Hi Emmett,
I am in the process of doing my financial projections for my business plan. Before I even go to the Small Business Development Center to have them look over it, I wonder if my figures are at all realistic. Here they are:
First 5 months almost no income (August 09 until Dec 09), after that: $22,000 first year (2010), $24,000 and $25,000 for year two and three (2011, 2012), respectively. Expenses are recorded for roughly $12,000 per year (yourmembership.com website development makes up for half of that - the rest is mainly for advertising etc.)
I believe the idea of the site is great (of course I do). My target audience are new young managers, male and female, age 20 - 35. I will collect advertising revenue and sell memberships (access to the platform - at $2.99 per month).
I know I didn't give you too much information, but can you tell me if this project seems realistic at all?
Thanks a million for your help,
anna
Answer The idea of the website seems sound.
Your figures indicate that you think that you will be working alone. The first year projection is probably a little too ambitious. To accomplish these figures starting out, the amount of advertising required will have to be higher. Normally, if a business is to succeed, there will be a ramp up. Say $5K, $12k, and $30K for years 1,2,& 3. The advertising costs, customer retention costs, support costs, ect, will also ramp up after an initial investment. The initial support cost per subscriber will be very high, but it should ramp down as you fine tune your support and retention efforts. Your initial cost percentage for advertising should be around 80%, but this figure should also ramp down depending on how aggressively you forecast growth. You should have a break even goal of say 2 or 3 years, but 3 years is probably optimistic.
When you miss your numbers the first time, be prepared to present the things that you have done to correct the situation. Additional personnel will be required within the first 3 years.
