No business model is written in stone, especially for startups, entrepreneurs need to quickly adapt to the changes to survive, however, there is so much emphasis on projections about revenue/growth in a business model about a product that is not in the market place yet? Although, a few smart investors/VCs may not care for this at early stage, and go with their gut, but many others may look at it as a ritual or as part of a checklist. I am just wondering, how each of you as entrepreneurs is handling your growth/revenue models that may be fictitious?
Don't fabricate, most startups try to blow the door off the shed during the presentation, “we will own 90% of the market and be b_zillionairs tomorrow.” The investors and VC’s I’ve been in front of are very smart people and many of them know a little about the possible markets and where your idea may fit, so spinning a story that is beyond lightning in a bottle, may backfire. I always try to show an understanding of the potential market, a rough sketch, and then I try as hard as I can to figure out what number do I need to break-even or turn a profit. I used that model to be my worst case scenario, because the idea for someone to invest is they are going to make the investment back +… A lesson that can be learned, if you can’t see or figure out that number… that may be telling you something about what you are doing. However, after I get that number, I then try to find other “like” companies and try to figure out there customer acquisition costs and trends / growth pattern, and then model a great return and a real success scenario (almost lightning in a bottle). I find this is a great place for questions and you need to know your numbers back and forward. My job is to convince you that I can make a product that will be profitable and that is the worst case and if we execute, read the market, we will do better… if we catch fire, all your investor friends and VC buddies are going to be jealous! Again, try as hard as possible, IMO, to be as fact driven as possible. You never want to go to the investor meeting / board meeting and say… hey I know I said we would have 35% monthly growth forever, but since the last meeting we got 7 customers for $2.99 cent yearly subscription… yeah, I know I projected 7,000,000 customer by now with 35% monthly growth... that is not a fun day… but I think you get the point.