When I’ve worked with small businesses, one of the hardest things to get them to do is develop a proforma financial plan—simply put, a financial plan for the next 12 and 24 months. Most small business owners understand the concept: revenues, COGS, expenses. And if they need help, YouTube videos or ChatGPT can walk them through it.
The hesitation is usually in the numbers. For small business owners, there’s something inherently scary about putting a number down on paper—or more likely, Google Sheets.
I’ve seen this firsthand. The conversation usually goes something like this:
**Me:** Can you create a forward-looking P&L for the next 12 and 24 months?
**Typical owner response:**
* “We don’t have enough data yet.”
* “Let’s wait until tax season—we’ll have better numbers then.”
* “I don’t want to put something down that ends up being wrong.”
* “We’re only a couple months in, it’s too early to know.”
* “We’re still figuring out pricing, so it doesn’t make sense yet.”
* “Cash flow changes every month; a plan won’t reflect reality.”
* “We’ll know more soon, once we’ve had more customers come through.”
* “I’m not a numbers person, I just focus on sales.”
And while all of that may be true, the absence of perfect data becomes an excuse not to plan at all. Instead of forecasting, owners wait. They wait for “better data.” They wait for “more time in the market.” They wait for clarity that never fully arrives—because the reality is business is always messy.
Without a proforma, you’re essentially a pilot flying to a destination you _think_ you know, but doing it in the clouds without any plan for how to get there—just hoping that if you keep going, you’ll eventually make it. If you wouldn’t want your pilot doing this, you shouldn’t want your business doing this either.
I can’t tell you how many times I’ve spent 30 minutes trying to convince an owner just to put down the cost of bananas in their smoothie business. The pushback? “Banana prices go up and down every week.” Bananas are about 20 cents each, and if they fluctuate between 15 and 25 cents, just put 25 cents to be safe. This doesn’t need to be a 30-minute conversation. But this fear of being “wrong” is everywhere. I think it ties back to how we were taught math in school. There was always a right answer and a wrong answer. Business owners wait to create a proforma until they think they can be 100% right. But you’ll never be 100% right about the future—so the best move is to make an educated guess.
Here’s the real point of a proforma:
1. First, to see if the business is actually viable—will it make a profit?
2. Second, to highlight the decisions you need to make going forward to make it viable, or better.
3. Third, to measure actual results against your proforma, so you can reflect on your assumptions, why they were right or wrong, and how that impacts the business moving forward.
And the best part? You’re not a public company. You don’t have a quarterly earnings call where if you miss your forecast the stock drops and the board starts looking for your replacement. You’re running a small business. No one will ever know if you were 5 cents off on your banana cost estimate.
The problem with waiting is that it stalls decision-making. Without a 12–24 month proforma, you don’t know what levers matter most. You don’t know how margins shift when you add a new location, or what happens to customer acquisition costs when you expand into a second market. You don’t know whether the model you’re running is simple and scalable—or complex and fragile.
What I try to get across is this: a financial plan is not a prediction—it’s a tool. You don’t need exact numbers to get value from it. Even a rough proforma forces clarity. It surfaces assumptions. It shows whether your business makes money in reality or only “in theory.” It lets you compare options—like which model is simple and profitable versus which model creates headaches for the same revenue.
The irony is that founders will spend endless energy chasing leads, hiring people, tweaking marketing campaigns, or rolling out new products—yet they hesitate to sit down and map out the economics of what they’re actually building. It feels uncomfortable, so they avoid it.
But as those conversations show, without clarity you’re essentially flying blind. You end up debating data you don’t have, waiting through months of customer cycles, or hoping the market hands you the answer. Meanwhile, money and time get spent without knowing if the model even works.
That’s why, in my experience, creating a simple proforma early is one of the highest-leverage moves a small business can make. It won’t be perfect, but it doesn’t need to be. The point isn’t to predict the future—it’s to give yourself a map so you can make decisions with intention, rather than by default.
And once you’re on board with the proforma, the next common mistake is not accounting for everything properly. If you miss key costs or overlook hidden expenses, your numbers may look fine today—but when you try to scale, the business won’t actually scale. I break that down more here: [Why Your Business Model Needs to Scale]().