Category Archives: Forecasting and Budgeting

Forecasting for Entrepreneurs – How to Develop Assumptions

Joel Schwarzbart gave a great talk on forecasting for the CSUF Startup Incubator

Joel Schwarzbart gave a great talk on forecasting for the CSUF Startup Incubator

Joel Schwarzbart describes himself as half a CFO. What does that mean? Well, basically it means that Joel is a consultant who does many (if not most) of the financial activities that a full time CFO normally does but he does them for multiple clients.

Earlier this week, Joel gave a talk at the CSUF Startup Incubator in Placentia (by the way, we  bring in experts all the time to give talks and to have office hours, you can see all of our planned events by going to our Eventbrite page) about how to do forecasting if you are an entrepreneur working on a startup. While he talked at great length on a number of subjects that are important for forecasting there was one thing that I want to focus on here: Assumptions.

The accuracy of your forecast, which is the combination of all of your projections for your business, is in large part determined by the accuracy of your assumptions. Some things you have to assume:

  • How much you will spend on marketing efforts
  • The costs of the raw materials that go into making your products
  • Variable employee costs
  • Conversion rates on your ads
  • Your effective tax rates
  • Travel expenses
  • How many new customers you will bring online
  • And the list goes on and on and on….

Many of the entrepreneurs and students I work with do not give nearly enough consideration to their financial assumptions and yet it is from these assumptions that all forecasts come from. Fortunately, there are some easy ways to develop your financial assumptions and here are some of them:

Company Financial History

If your company has been around for a couple of years you will have to assume less than you would if your business is a startup. Simply use your actual history and financial statements to inform your assumptions. You will still have to take into consideration some other data points that I will cover presently.

Industry Norms

For our students, I always recommend them to look up the industry norm financial ratios in the library. In our library there is a database of financial ratios that is broken up by industry and by company size (there might be a huge difference in quick ratio for a small company versus a large company after all). With these kinds of industry and company-size financial ratios you can compare them to the financial ratios that you have developed for your pro forma (forecasted) financial documents; if the financial ratios you have aren’t even close to the industry norms then you might have an issue.

Besides financial ratios, there are many other kinds of industry norms that you can find out if you look hard enough or ask the right people about (industry magazines are usually a good source for this kind of information as are people who currently work in a given industry). For example, if you are opening a restaurant it would be a good idea to figure out your turnover rate (how many times a table is used over a period of time by a party).

Other Secondary Data

Besides industry norms, there are a lot of good sources of secondary data, which are nothing more than other sources of relevant information. For example, knowing the general strength of the economy is a good thing to know; knowing the strength of the economy for your area of operations is even better. Maybe the weather plays a part in the success of your business or maybe new regulations will play a more significant role in your business. There are many different fields to look into for secondary data.

(Yes, industry norms are a kind of secondary data but I think they’re important enough to have been covered separately.)

Observed Data

Now that I think of it, this might be the best kind of data that there is. If you directly observe something then that’s data that others do not have. For example, I remember reading about a startup a number of years back that was making some pretty good money taking pictures of department displays. Why? Competitors and companies that make items that go into department stores really wanted to know what was popular at that moment.

I have counseled students to get a head count on how many people went into a restaurant. Municipalities put out those strips on the road to get a count of how many vehicles pass by. Doing A/B (or multivariate) testing is another awesome source of observable data. Your company’s history is a form of observed data and, please, keep good metrics on your business; that will help you immensely.

So What?

I’m sure that there are other broad sources of data that I missed but I think you get the picture about assumptions. They are important because, like food, if you put good stuff in you will get good results and vice versa. And you need to have quality forecasts for your business so that you:

  • Make sure you have positive cash flow
  • Can plan to produce the right amount of product
  • Know where to spend money to get a good ROI on marketing
  • etc.

Forecasting is a fundamental part of any business and we were lucky to have Joel give a great talk on forecasts. But forecasting is just a part of growing a business. There are a lot of things to consider and to do it right you should have mentors to help guide you. You can find them on your own or you can work with mentors that you can find at CSUF Consulting or the CSUF Startup Incubator.

CSUF Consulting is great for clients that already have a business who are looking to improve in some fundamental way (i.e. marketing, operations, leadership, etc.). Each client is paired with a student team and a mentor who, as part of their classes, work with clients over the course of a semester to develop a comprehensive strategic plan that directly addresses some of the toughest issues or most promising opportunities that their client has.

The CSUF Startup Incubator, on the other hand, is built off of decades of entrepreneurial experience to help entrepreneurs go from concept to launch. At the beginning of a six month residency, entrepreneurs at the CSUF Startup Incubator sit down with Incubator staff and their dedicated startup coach to develop a startup plan that will position the entrepreneur for success. From that point on the team gets to work implementing that plan with the help of the entire CSUF Entrepreneurship community, which includes more than 500 subject matter experts who can be called upon to help. Oh, and residents at the CSUF Startup Incubator also get one of our CSUF Consulting teams attached to their startup to help them develop their startup plan by focusing their efforts on a critical part of the entrepreneur’s startup.

Give us a call today if you are interested in working with us, our number is (657) 278-3930. And to learn more about how to become a successful entrepreneur make sure to check out our Knowledge @ CSUF Entrepreneurship series where we have published posts and videos on topics that are important to entrepreneurs.


For more details on CSUF Entrepreneurship:

For more details on how we help people become entrepreneurs:

For more details on how CSUF Consulting can help businesses thrive:

Attend one of our events for entrepreneurs or sign up for a free mentoring session:

Knowledge @ CSUF Entrepreneurship video series:

Forecasting for Entrepreneurs @ CSUF Startup Incubator

ForecastingTomorrow at the CSUF Startup Incubator Placentia office at 6pm we will be hosting an event called Forecasting for Entrepreneurs. Being able to properly do forecasts is a critical skill for entrepreneurs to posses. Cash flow is king and being able to effectively project how much you will have in the future can make the difference between your business’ success and failure.

Below are the details for this event and if you plan on attending please make sure to register on our Eventbrite page.

As a CFO for tech startups Joel Schwarzbart knows a thing or two about forecasting. And that’s a good thing because any business, whether they are the newest startup or a NYSE stalwart needs to know how to forecast.

But how are you supposed to do forecasting for you business when you are brand new? Joel will discuss the strategies that he uses to develop a robust forecasting model for his clients and how you can use the same principles that he uses to create a good forecasting model for your startup or small business.

Pizza and soft drinks will be served at this event.

We hope to see you there!

[Please park on Bradford Ave. Our building is located next to the fire department and there is a large for lease sign in the front yard. We are located in the back of the building.]


For more details on CSUF Entrepreneurship:

For more details on how we help people become entrepreneurs:

For more details on how CSUF Consulting can help businesses thrive:

Attend one of our events for entrepreneurs or sign up for a free mentoring session:

Knowledge @ CSUF Entrepreneurship video series:

Creating your Formula for Startup Success @ CSUF Startup Incubator


Mark Pakbaz will be giving a talk at the CSUF Startup Incubator soon. We hope to see you there!

Register now for this immensely important talk for entrepreneurs and business people of all kinds by going to THIS PAGE.

Dr. Marc Pakbaz’s talk will take place on Wednesday, February 8 at 6pm at the CSUF Startup Incubator in Placentia (120 South Bradford Ave., we are in the back of the building).

Numbers Talk

We are surrounded by numbers. Everything seems to be measurable by numbers, everything!

Everything seems to be projectable, everything!

  • How can we see the past, the present and more importantly, the future in numbers?
  • How can we apply these rules to our businesses?
  • How can we use numbers to measure our businesses?
  • How can we predict the future of our businesses with numbers?

These are the questions that Dr. Marc Pakbaz will answer. Ultimately, after this seminar, Business owners and Executives will be able to vividly visualize the future of their business.

Dr. Marc Pakbaz Profile

Dr. Marc Pakbaz is a serial entrepreneur and a business consultant.

Dr. Pakbaz has owned and sold 2 companies, after facilitating their turnaround from an unsuccessful and unprofitable company. He became then a specialist of “fixing failing business” and developing and executes a plan to prepare companies to be “sellable”. Continue reading

How the Falling Birth Rate in the U.S. Affects Business

Falling baby pandas (yes, we know it’s a stretch)

The birth rate in the United States is at the lowest ever recorded, according to new data released in November by the Pew Research Center.  This has important and long-term implications – political, social, and economic.  It also affects how marketers will try to sell their products and services.

The yearly number of births per 1000 women between 15 and 44 years old dropped to 64 births per 1000.  For comparison, the birth rate in the United States peaked in 1957, at 122.7 births per 1000.  When the economy was strong, the United States experienced a baby boom.  Now, as the economy limps along in its recovery, twenty-somethings may still delay becoming a parent due to high student loans or a difficult job market.  The steepest decline in birth rate was among Hispanic women, who have been hit particularly hard by the recession.

The United States has been the envy of the developed world because its birth rate has generally been high enough to replace people, due in large part to immigrants and their children.  The reason you want to have a stable or growing population is so the younger workers can support the older members of the population as they age.  Countries dealing with falling birth rates, like Japan, are very worried about how to tackle this social issue.

If Americans are having less babies, this means businesses that sell products or offer services catering to young families will have to adapt or risk losing revenue due to decreased number of babies being born.  Schools, childcare centers, and children-related businesses will need to adjust their game plan if their core consumers are less than before.

By contrast, companies that specialize in products or services catering to the elderly population are likely to do quite well.  Services would include healthcare, meal delivery, transportation, and more.

The average age of a working American will increase, and this will affect workplace dynamics.  Some worry about whether this will mean decreased productivity or innovation, without lots of energetic, young counterparts putting pressure from below.

Birth rates generally bounce back after economic downturns and there is no reason to expect that people won’t begin having babies at a higher rate.  Nevertheless, even a temporarily depressed birth rate can have significant consequences long-term.

For entrepreneurs, the falling birth rate offers opportunities and risks. Knowledge of this trend could prove powerful.

John Bradley Jackson
Director, Center for Entrepreneurship

[image: daodao]

2013 Small Business Outlook for Orange County

The Orange County Register recently asked eight influential members of the business community what they expected for the OC economy in 2013. Here’s one response you might find interesting from Center for Entrepreneurship Director, John Bradley Jackson:

John B. Jackson

director, Center for Entrepreneurship, Cal State Fullerton

While the federal government officials may fear a “fiscal cliff” with increased budget deficits, small-business owners may face a “fiscal prairie.” The outlook is flat, dry and dusty. For the small-business owners who survived the last four years, most are out of cash, have little access to new capital, have downsized to bare bones and remain desperate for revenue.

Because of this fiscal prairie, small-business owners are selling their businesses in record numbers. For entrepreneurs with cash and courage, it is a buyers’ market. Many of the small businesses are priced at salvage value. There are bargains galore.

Need help With Creating Financial Controls?

Need help with creating financial controls and better accounting practices?

Have CSUF student consulting help — they can do the things that you have wanted to do but have not had the time to do.

Student Consultants are standing by.


Travis Lindsay
Center for Entrepreneurship

Need Help With Accounting and Financial Challenges?

CSUF Business Students can help with budgeting, purchasing, collections, payroll, taxes, controls, financial reports, cash management and banking relationships.

Contact Charlesetta Medina at 657 278 8243 or email her at