

Ask HN: Do you bother with financial/business forecasts? - jconn

Do any of you guys find forecasting a useful part of your business? Do investors usually impose requirements on tracking certain metrics vs what you said in your plan over time?<p>I&#x27;m a former financial analyst turned programmer and am working on developing some tools for tracking business performance vs. a rolling forecast. Just wanted to get some insight from the community before I get too far along.<p>What are the most important things you monitor quantitatively to measure the success of your venture? What are you doing today to measure them?
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phantom_oracle
I don't know about other companies, but depending on the type of startup
you're running (eg. a SaaS vs. a free service with ads), some things that
could be focused on are:

Month-over-month growth in:

User numbers Sales Length of time spent on site/app

You could also possibly measure year-over-year growth. As far as comparison
goes, perhaps using a stock-market tech index will be a good way to determine
if you are experiencing good growth (although this may not matter if you are
not targeting massive growth and an IPO/acquisition).

The problem I personally see is that as entrepreneurs, we/them will tend to
focus on measuring every metric (through some template we found on the
internet), yet it makes more sense to determine what metrics truly matter
(determining what is important is tough for somebody not experienced in
finance/accounting).

"What are you doing today to measure them?"

Probably using analytics tools (a big part of the SaaS market I think) and
also tracking your finances through finance tools (another part of SaaS).

Oh, and per your title question, I think all companies bother with forecasts.
They give a sense of direction, in terms of what your growth trajectory is
(you can also use forecasts against actual numbers to see why you couldn't
mean targets and using that info, spot flaws/weaknesses in your business).

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jconn
Thanks for some excellent insights here - much appreciated.

At a high level - our concept is to create a prescriptive tool for bottom-up
forecasting (i.e. building up from metrics like the ones you mentioned to how
those drive revenue/costs)

What tools for analytics/finance have you found to be most useful? Ideally
we'd like to set up our product to tie in to existing systems directly (where
possible) to essentially automatically track overall performance vs. plan over
time.

Getting some ideas as to what processes SaaS businesses currently use would be
hugely helpful to make sure we're staying on the right track.

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rahimnathwani
_Do investors usually impose requirements on tracking certain metrics vs what
you said in your plan over time?_

Some Private Equity investors have a standard set of metrics they like to
track across all portfolio companies. Some of them will be key figures from
financial statements (P&L/BS/CF). Others will be financial ratios. Others will
be specific to the types of business they invest in (e.g. ARPPU if they're
investing in SaaS businesses). Still others will be non-financial (e.g.
headcount grouped by function, change from the previous month in each
function, overall staff turnover).

Once you are close to firming up your business model, having a financial plan,
and tracking progress against it every month, is really useful.

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lily2014
Firstly, the forecast must based on actual resource.We can prepare relevant
information/ resource/ material based on correct forecase. Every month adjust
guide based the forecast and actual production.

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poseid
cashflow: income vs. expenses, and everything related to taxes.

