Proformas That Build Empires

Welcome to Your Business, Accelerated! Digitally remastered with AI, Your Business, Accelerated! is the go-to podcast for entrepreneurs ready to scale smart. Hosted by Attorney Shaune B. Arnold, it delivers strategic business insights, legal frameworks, and real-world solutions to help you operate with clarity and confidence. Get actionable guidance to protect, grow, and optimize your business…one smart move at a time.

Whether you're launching a lawn-mowing side hustle or developing a multimillion-dollar real estate project, the pro forma is your ultimate planning tool. Attorney Shaune B. Arnold breaks down how this dynamic document can guide your budgeting, forecasting, and scaling decisions—so you can track success, control costs, and build your business with precision. 

Transcript

Hello everyone, and welcome …as always …to your business accelerated. I am your host, attorney Shaune B. Arnold. I’m your host, this week and every week here on your business accelerated. You are wondering to yourself, what is she doing on Your Business Accelerated?

Well…I am a California business attorney, and that means that as we deal with legal and business issues here on your business accelerated, particularly the legal issues. I want you to be aware that I am a California business attorney, and so if you live somewhere else, I recommend that you take whatever legal information I give to you and take it to an attorney in your jurisdiction so that you can find out if there are any differences between the law where you are and the law where I am.

I also invite you to visit me on my other podcast, LegalBiz Café. On that show we deal with the mindset issues that can stop you in your tracks and keep you from building a business that you will absolutely love. When you listen to LegalBiz Café and Your Business Accelerated, you are getting mindset and skillset enhancement that will help you catapult yourself clear into the next dimension with your business. You’ll find your success.

We have an exciting show for you today. We are talking about how to calculate your success. That usually comes down to the numbers. Now, full disclosure: …attorneys are really notorious for not doing numbers. I depend on financial professionals to calculate and clarify the numbers for me.

My second secret weapon is the pro forma. They come in a lot of different shapes and sizes, so I wanted to discuss pro formas today, really in terms of what they are and how you can use them.

You can use them in for-profit entities and in non-profit entities. At the barest level, a pro forma can help you scratch out what you want to do and get your project going. For example, what if you have a kid in college. Frankly, that’s expensive. You’re trying to close the Bank of dad. How do you help Junior make money to make up for what he’s about to lose?

Well, you can sit down with him over the kitchen table and create a really fast pro forma. That would mean talking about what his monthly goal is. Does Junior need $1,000 a month to get himself through? Break that down for him. 

The average month has four work weeks, so that's just 250 bucks per week that he needs. And if he's just working five days per week and taking his weekends to study hard, then all he needs is about 50 bucks per day. What can Junior do that will make him 50 bucks per day?

What kind of skills does he have? A lot of kids are really tech savvy these days. They can build websites and all kinds of things to help people, who are not tech savvy. If he's not tech savvy, he could do something like walking dogs or mowing lawns.

Let's say that he wants to mow lawns. How much is that per week? Let’s assume it’s about $10 per lawn. If he needed 50 bucks per day for a five-day week, he would have to mow five lawns daily. I would guess that that would take him about three or so hours per day, roughly 15 hours or so per week. He should be able to make $1000 per month. And you just worked it out in a very small pro forma on the kitchen table.

Pro formas can get a lot more complicated than this. For example, you can use a pro forma for calculating numbers for a business plan revenue model. You would calculate monthly your numbers out to three years. All of that is made much easier when you use a pro forma. It would calculate out all of your monthly fixed expenses, including your phone bills, employee costs, healthcare costs, all kinds of things.

You have to sit and think about all the moving parts in your business, all the money that you spend on a monthly basis, some of which varies month to month, and some of which is fixed monthly. Get a good handle on what those numbers are. The best way to do that is by using a pro forma.

In addition to money spent, the pro forma will show you when you're going to hit your breakeven point. You’ll know how much money you have to sink into the business before that point. You'll know the required use of investor funds.

You will also know how much time you have to sink into the business in order to make it a success. And you'll know how much relationship capital the business will cost you in terms of friends, family, boards of directors, mastermind teams, all kinds of people that you have to pull together to make your dream happen.

The pro forma will help you calculate your costs. It will help you contain your costs and track them over time. In this way, the pro forma is a living document. It is a tool that you really want to look at on a continuing basis, and tweak on a continuing basis because the pro forma is not tracking your processes. Rather, it’s tracking your money.

Take a step further back and look at the business as a whole. Say, for example, a speaker wants to make a million dollars speaking. They would have to look at all the products and services they offer as a professional speaker. Each of those products has a value. If they are looking to make a million dollars. In addition to speaking, their business consists of downloadable products, including a book they wrote years ago, and live workshops they do throughout the year. All of those are moving parts of their business.

How do you calculate all that out? Well, you have to lay out all of those moving parts, the downloadable materials, the books, the workshops, the coaching, and then project how many of each of those things they are likely to sell in a month. For example, how many audio or video downloads are they likely to sell in a month? How many books are they likely to sell in a month? The more expensive the item, the fewer of those items they can reasonably expect to sell.

So, price all of those items and then project out on a monthly basis how many of those items they are likely to sell. This will give them an idea of whether they’re going to make that million dollars this year.

At the end of the year, they can assess whether they undershot or have exceeded their goal. Have you overshot or undershot your goal so far this year? Are you meeting your goals for all of your various products, workshops and all of your coaching sessions this year?

You want to track how close you’ve come to making your goals. Maybe you exceeded them in some ways, and maybe you fell short in other ways. And then you can look at your value system and see where you were really spending your time. 

You know, you spend your time on the things that are important to you. That is really what your values represent, the things that are important to you. Your pro forma will likely reflect those values, and it will tell you immediately how you have to tweak what you're doing in order to get to the million dollars.

The pro forma used as a revenue model is a really good barometer of how your business is doing. This is such a live document, it will tell you, over a period of months, where your sales are, where you should be spending your time, what you should be concentrating on, and what you may need to tweak. For example, do you have a product that's just too expensive? People aren't buying it, so you may need to run a special on that product and drop the price.

The pro forma can really help you calculate, not just what you want to do in your business, but where you want to go in your business. So, like Junior you can start from $1,000 and work your way back to five product sales per day. Or you start with a million dollars and work your way back to 50 downloads, 30 books, 20 hard copy sets, 10 workshops, five private coaching clients and three group coaching clients in a month, and that fluctuate throughout the 12 months. 

These calculations will help you figure out where you're going and what you're doing on a monthly basis, so you don't feel so much like you're just with your pants hanging out the window and with no idea of what's happening around you. You really want to track very carefully what your goals are for your products and your services, and what your actual sales numbers are for your products and your services, because that's one sure-fire way you're to know where you need to make your changes.

Now, pro formas can get a lot more complicated than even this. As a professional speaker, attorney and business consultant, I only have so many moving parts in my business. You only heard me mention a few things, downloads, books, physical products, workshops and consulting, right? But if I were, say, a property developer, then I would have a lot more moving parts on my pro forma. 

It would include on-site improvements, the building and all that is in it, and maybe some off-site improvements, like hooking your gas lines, water lines and waste lines to the city, and any city-wide improvements that might be available to your project, like electricity, etc. All of those things cost money.

You have to actually pay a fee to the city, like $30,000 to $50,000, or more. You have to know what kind of services you're going to need, whom you're going to have to pay and how much you're going to have to pay them. This is going to help you actually lay in your investor dollars, because you'll know up front how much money you're going to need.

So, in addition to things like landscaping and buildings, you have to think about community rooms and open spaces. You have to dig even deeper. You’ll have to consider how much parking to include in your project. How many appliances will be included? Will there be central air conditioning and heating? All of these costs and expenses must be included in the pro forma.

Perhaps you have buildings and structures that are in place and you need to rehabilitate them. How much is it going to cost to fix these things? You may have architectural costs, design costs, and these will be split up into actual designs, and then professional fees, supervision fees, reimbursable travel costs, civil engineering and survey costs and goodness, soil remediation costs, …all of these things find their way into a pro forma that has so many moving parts, like the development itself.

So, you see, there are a number of different types of pro formas. I encourage you to really think about how deeply you need to delve into your numbers. Perhaps consider getting some assistance. You can actually buy a pro forma in the marketplace.

I have purchased pro formas for nonprofit clients where I could help them calculate how much money they needed to bring in on an annual basis. I helped them do their budget. The numbers wound up in their business plan.

So, I just wanted to pull your coat tail tonight to the importance of actually sitting down and calculating the numbers in your business. Consider all of the moving parts right down to bond and other insurance premiums, and everything else that you're going to need to spend your money on. This is the best way to know when your project will reach the break-even point.

I encourage you to look into building a pro forma, buying a pro forma, or finding a professional to do a pro forma for your project, whichever suits your needs, and then be about the business of building your dream.

Ladies and gentlemen, I want to thank you for joining me on this week's episode of your business accelerated. I am your host attorney Shaune B Arnold. I invite you to follow me on Facebook, LinkedIn and Twitter-X. In all of those places. My moniker is s-h-a-u-n-e dot Arnold.

In the meantime, and in between time, I’m reminding you, as always … to MAXIMIZE your COMPETENCE to get the CONFIDENCE ...you need ... to succeed.

I'll see you next week, ...right here on your business accelerated. ...Bye-bye, friends!