Tag Archives: business plan financials

Round About

Kelly Hinkle
August 1, 2014 by

The graphic below shows two different forecasts for “daily average users” for a company making mobile apps. Does example #1 or example #2 look more “right” to you?

RoundAbout-KellyBlogPost

Example #2, you say? If so, you’re in the same camp as some of our clients who are suspicious of round numbers.

Or are you much more in sync with the simplicity/cleanness of Example #1?

Guess what? You’re right either way! It’s a forecast. It doesn’t really matter! You are never going to accurately predict the future to $1 or $1,000. Some people like the product of a monthly growth rate (like 5%) and if that results in a messy number like 499,354, then they think it’s at least backed by something (even if the 5% is arbitrary anyway). Others, like one economist colleague I could name, lose their professorial cool when forecasts aren’t round.

Once we encountered a client who found the number “666” unintentionally hidden in a six-digit number in their balance sheet forecast. They thought it was bad luck to have in a business plan, so we exorcised it.

As long as your numbers make some logical sense in scale and seem reasonable, do whatever makes you happy. Sneak in the digits of your dog’s birthday even. You only live once.

Estimating Rent is Easy

Kelly Hinkle
July 25, 2014 by

It’s Friday. Your brain might be clogged and craving something as soothing as an Orphan Black binge watch. Still, this math will do you no harm. We promise.

If you’ve been trying to estimate your monthly expenses for your dream business, here is one you can easily check off the list – office rent.

Here are the steps:

  1. Decide how many employees you’ll have. Let’s say 10.
  2. Multiply that amount by an average of 200 square feet per employee.
  3. Arrive at estimated square footage (2,000).
  4. Go to Loopnet.com and search for office leases at your desired location.
  5. Skim the listings for lease rates per square foot and roughly estimate an average. Okay, lease rates in Carefree, Arizona are about $15* per square foot.
  6. Multiply the annual rate per square foot ($15) by your estimated square footage (2,000) and voila, a good estimate of rent ($30,000 per year).

*Note that sometimes rates are listed as monthly rates and in that case you can just multiply that rate by 12 to get an annual total.