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

3 pointsjconn11y ago5 comments

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?

I'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.

What are the most important things you monitor quantitatively to measure the success of your venture? What are you doing today to measure them?

5 comments

phantom_oracle11y ago

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).

jconnOP11y ago

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.

rahimnathwani11y ago

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.

lily201411y ago

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.

poseid11y ago

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

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