Budgeting: Starting from Scratch

Setting budgets and figuring out sales goals can be tricky for startups. Here are some pointers to ease the process

Startups are different from established businesses when it comes to budgets and sales projections. With no track record, even the best attempts at projections will be a bit pie-in-the-sky. "We can't look at the third quarter of last year and try to do 20% better," says Arthur Meyerson, a serial entrepreneur who launched Forward Health, a New York health network, last year. "Really, you can't do much beyond hoping your revenues are in excess of your expenses." Here are some pointers to help you meet that goal.

1. Find your customers. What are they willing to pay for your product or service?

2. Once you have customers lined up, look at expenses. What is the cheapest way to get your product or service out the door?

3. Reach out to industry or executive associations to get a sense of similar companies' margins and expense histories.

4. Revise, revise, revise. Says Raffaele Mari, managing director of the Tax Consulting Group in Newport Beach, Calif.: "If you don't have the luxury of a track record, then a monthly revision of your budget is even more crucial."

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