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Startups bet on rapid growth rather than immediate profitability. But between lofty ambitions and on-the-ground reality, the art of the business plan lies in building solid assumptions without falling for the illusions of spreadsheets. A credible plan must weave together a clear vision, well-supported data, and the ability to adapt to unforeseen events. The credibility of a team depends less on the precision of its forecasts than on its lucidity and capacity to stay the course when promises meet reality.
A successful startup takes nine years to reach €9.3 million in revenue after raising €4 million. Its median exit value is €38 million (source: Avolta). Moreover, only about half of these startups (58%) are profitable at the time of exit, whether through acquisition or IPO. Unlike traditional companies, the financial strategy of startups is to grow as quickly as possible, even at the expense of immediate profitability. That logic holds when your company is valued at a high multiple of your revenue (in this case, 4.1 times median turnover), regardless of your operating profits.
The failure rate for such ventures is admittedly high (over 90%), but the median performances mentioned above are far superior to those of traditional businesses and often represent undeniable technical, commercial, and financial successes. Still, if you present such forecasts to occasional investors, many will respond that you lack ambition, because they dream of exponential growth the kind that only spreadsheet fumes can usually deliver.
Is making people dream a necessary step?
Should one then follow the path of certain politicians, who know all too well that if you fail to make voters dream, you are unlikely to win their support?
In May 1940, during his first speech to the House of Commons, Winston Churchill famously promised only “blood, toil, tears, and sweat”, but selling dreams was no longer possible in such exceptional and dramatic circumstances.
Even the most seasoned investors pay little attention to your financial forecasts, convinced as they are that entrepreneurs tend to be overly optimistic. Antoine Garrigues, one of the pioneers of French venture capital and cofounder of the Iris Capital fund, puts it bluntly: “We run our calculations on a business plan cut in half and then see if we can make three to four times our investment.”
How far can one stretch growth assumptions without being trapped by them, when promises collide with the wall of reality? Should you, then, inflate your sales and profit forecasts, knowing they will almost certainly be revised downward?
Base Case, Alternative Scenarios, and Contingency Plans
A business plan is far more than a set of financial projections, but it always includes them, as they translate your objectives, your strategy, and your development milestones, punctuated by investments, operating expenses, revenues, and potential external financing.
The main scenario presented in your business plan is known as the base case: what you expect to happen when everything goes “according to plan,” with no major errors or incidents. You may also include variants—alternative scenarios or contingency plans—to reassure potential investors of your ability to adapt and rebound in response to social, cultural, economic, political, technological, environmental, or legal disruptions. These different types of plans and scenarios, analyzed through the lens of the impact and frequency of such disruptions, can be represented as follows:
A small team obviously cannot spend most of its time running endless simulations. But if this planning effort is collective and grounded in real fieldwork, it enables informed decision-making. This collaborative process fosters strategic agility and makes it easier to implement key actions, since the team will have been actively involved in defining them.
Different Expectations at Different Stages
For an early-stage company, the basic assumptions are especially hard to define. There is no historical track record, and the range of possible outcomes is vast: from rapid growth to stagnation or outright failure. Your credibility will rest on your ability to justify several key parameters, notably the costs and timelines for developing your offering, your pricing, your operating margins, and your commercial performance. Investors assess this last factor through your Customer Acquisition Cost (CAC) and your Customer Lifetime Value (CLV), the cumulative margin generated by a single customer.
For a more established company, short- and medium-term forecasts depend largely on past performance and your order book. The level of scrutiny from your financial backers will be higher, focusing on your ability to anticipate cash consumption and generation. This expectation is aptly summarized by Victor Lugger, cofounder of the Big Mamma Group: “Once you’re past €10 million in revenue, your investors will be watching your free cash flows.”
Promises and Business: How to Stay Credible
Presenting a credible business plan brings you back to fundamentals: how strong is your value proposition? How sound is your business model? Are your financial projections based on assumptions backed by solid data? And beyond the triptych of “value proposition / value architecture / value equation,” have you assembled a skilled and motivated team aligned around shared goals and values, capable of executing your development plan and adapting to the inevitable challenges that will test your base case?
Playing with assumptions is not cheating, provided you never lose touch with reality. A good business plan is not a work of speculative fiction. On the contrary, it is a strategic compass that helps you navigate uncertainty, accounting for margins of error and contingency plans. Your investors do not expect perfect forecasts, but rather a lucid strategic mindset that balances ambition with prudence. Ultimately, an entrepreneur’s credibility is measured less by the accuracy of their promises than by their ability to readjust them without losing direction.
To define that direction, we recommend grounding your reflections as closely as possible in your customers’ needs and your ecosystem’s key players; while also engaging with fellow entrepreneurs, financiers, and experts whose perspectives will help you transcend the somewhat cynical remark once made by a French politician: “Promises only bind those who believe in them.”
