Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing.

There are two approaches to financial forecasting for startups.

The first is top-down forecasting.

Top down takes a macro perspective by using the overall market sizes and industry estimates for your type of business. 

The top-down approach uses market share. Market share is divided into three segments:

Total Available Market — anyone you can sell to.

Serviceable market — your target market.

Beachhead market — your initial segment to pursue.

Base your financials as a percent of market share.

Look at similar companies in the space to identify the COGS, gross margin, and operating expenses.

Give yourself three years to ramp to profitability.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.
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Disclaimer:
Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.