I am fortunate that I have a network of friends and investors that are willing to spend their energy to critique my work and push me to my limits of analysis. Starting a business is an intense and deep analysis of a market opportunity.  Collecting data, parsing data and organizing the data into presentable and usable information is the basis of a business plan.  The internet contains so much data that delineating applicable data from noise is a challenge.

I recently presented my financial analysis to a prospective investor who challenged how I employed some data.  My financial model contains consumer texting statistics. My mistake was using the data in aggregate when I should have investigated the constituents of the data.

My wife and I attended the Colorado Outward Bound annual fundraiser (a worthy organization to considered when budgeting your non-profit gifts).  Upon returning home my daughter told me that the babysitter we left her with texted non-stop while we were at the 3-1/2 hour event.  My 9-year old daughter (super genius, super athlete and the sweetest kid ever), put a spotlight on my data error.

I tore through the data again, parsing the data to delineate my customer profile. My base market size assumptions were cut by 2/3.  This had a massive impact on the pro forma.  Repairing the data error identified other errors I had made, ultimately the model received a major overhaul.  The result is a model that produces more practical pro forma.  Believe me there is still plenty of upside but my confidence in scenario analyses is much higher.  I can’t wait to defend the pro forma again because I have the knowledge that is power.