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When to use Y1 vs. 2016/2017?

I am in the early stages of a company (pre-everything) and want to put together a pitch with a 5 year plan. When I leave the titles as Y1..Y5 it looks very conceptual. It's just an optics issue but when it has specific years (e.g., 2016..2020) it just looks more real. However, Y1 starts in the middle of 2016. So if I use the calendar years then 2016 and 2017 look anemic. So my choices are:

* Stick with Y1..Y5
* Show the anemic first couple years
* Start with a mid-year fiscal year so Y1 now becomes FY2017 (and risk making it look like it takes an extra year to create)
* What else?

What do you do?

6 Replies

Jim Twerdahl
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Jim Twerdahl Entrepreneur
Marketing and Strategy Consultant and Investment Banker to Small and Middle Market Companies

You may want to base your decision on who your prospective investors are. Professional investors, including members of angel groups and VCs, are used to seeing Y1...Y5 and are realistic enough to know that you don't actually know when your funding is going to come in. But for less sophisticated investors who may not be used to thinking that way the calendar years are probably best.

Even for professional investors the use of actual years shows confidence and determination, but if you are at all delayed you will find yourself constantly updating your projections.

Just as you have to for your business product or service, think about who your target market is and then make a decision.


Rob Gropper
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Rob Gropper Entrepreneur
Director at PetHero, SPC - Member at Eastside Incubator - Principal at Tuxedo Technologies Group
who is the pitch for? If investors, then understand that it is highly unlikely you will attract professional investment until after you have a product/MVP and some traction anyway so at this stage look at this exercise as for your own edification in which case Y1 - Y5 is just fine. Professional investors know your numbers beyond year 1 or 2 are almost impossible to forecast with any accuracy and understand that your 5 year plan is just conceptual anyway so again Y1 - Y5 is fine. what they are after is how you think and what assumptions you make in assembling your model. YOU are the first person you need to sell on the numbers.
Neil Gordon
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Neil Gordon Advisor
Board Member, Corporate Finance Advisor and Strategy Consultant
I like real years and have no issue with a short first period. Just label it accordingly so there's no understanding.

When I see Y1, Y2, etc., I question whether competitors, customers, technology, etc., are waiting for you to get funding or if they are marching ahead in real years!
Todor Velev
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Todor Velev Entrepreneur
Managing Partner, EEI Network
Probably you should Ask yourself if using Y1 vs real years will impact your cash flow, otherwise is irrelevant. The impact may come from tax deductions, for example, or other cost and revenues related issues if your Company already had activity, P&L and Balance sheet. In this case you should continue the forecast in calendar years with the corresponding running costs. As with regard to terminal value or other valuation issues, the probability to close a deal at 31 of Dec of a calendar year is probably equal to do the same at the end of Y5 or Y10. Which means that your time units do not matter (Y or calendar year). Todor Velev Sent from my mobile
Siamak Farah
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Siamak Farah Advisor
CEO at InfoStreet, Inc.
I would use real years. 2016 will be shorter and the build up period. Most, if not all, investors will understand and appreciate that. Best of luck.
Michael Dowden
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Michael Dowden Entrepreneur
Director at COTNow, Biz-Guru, Human Destiny, Heliski.ski and EMvision
Its your business you can show what ever you want, where you run calendar years, actually years projections on when you start on you project on yearly periods finishing after peak cycle is completely up to you depending on what you want to show.

What I would be more focused on is how can you show significant increases in the value of your business allowing for greater ability to raise funds, access higher levels of capital from lending institutions or investors for growth.

The big question you should be asking would be : What is the end goal of my business? and how do I best gear / designing my business for that now?

It you would like to discuss details around this further, let me know.
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