i. Your gross margins, customer acquisition costs and other financial ratios should be in line with the industry — do not attempt to impress by providing unrealistic measures.
ii. Revenue projections should be tied directly to your sales model and the aforementioned business plan.
iii. In addition to the profit and loss statement, you should provide both a projected balance sheet and cash flow statement with assumptions for inventory needs, timing of receivable collections and other cash needs that are not apparent on a profit and loss statement alone.
iv. As we have touched on before, when you are communicating financial performance for potential investors, it is helpful to have commentary linked to each page to provide clear context.
v. Your financial projections should normally be over a three- to five-year period. Beginning with monthly or quarterly projections in the early years, then moving to annual in later years is often sufficient. Keep in mind that your actual results will be compared to these projections down the road. Your growth projections should be aggressive, but not unrealistic. Chances are that if you are reading this, you are not the next Facebook — so don’t pretend to be.