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What if You Could See the Future of Your Business?
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What if You Could See the Future of Your Business?

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Wouldn't it be cool if you could test your next great business venture in a virtual sandbox before you spent a lot of money to prove the concept in the real world? We provide exactly this--a framework …

Wouldn't it be cool if you could test your next great business venture in a virtual sandbox before you spent a lot of money to prove the concept in the real world? We provide exactly this--a framework with which you can link every business logic to their financial impacts.

Published in: Business, Economy & Finance

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  • 1. s conomic
  • 2. What if you could
  • 3. What if you could the FUTURE of your business?
  • 4. If you could
  • 5. theVALUE of ...
  • 6. ... the ACQUSITION you are planning ...
  • 7. theVALUE of ...
  • 8. ... entering a newMARKET...
  • 9. theVALUE of ...
  • 10. ... yourHEDGING PROGRAM ...
  • 11. theVALUE of ...
  • 12. ... building a newPRODUCTION SITE ...
  • 13. theVALUE of ...
  • 14. ... alternativeproduct PORTFOLIOS ...
  • 15. ... alternativeR&D PORTFOLIOS ...
  • 16. ... alternativereal estatePORTFOLIOS ...
  • 17. theVALUE of ...
  • 18. ... LEVERAGING your firm ...
  • 19. theVALUE of ...
  • 20. ... an entirely new BUSINESSwww.businessmodelgeneration.com MODEL
  • 21. For this you need just 3 THINGS
  • 22. 1
  • 23. A PLANNINGthat doesn’t start with ...
  • 24. theNUMBERS
  • 25. but with theBUSINESS LOGIC behind them
  • 26. With such a DRIVER-BASED PLANNING ...
  • 27. Income Statement Cash Flow... every financial figure... Balance Sheet
  • 28. Income Statement Cash Flow... results from the logic of your Balance Sheet business model.
  • 29. And every single part of the model...
  • 30. l the del ike mos a les
  • 31. he of r t ng o lim ode lies su pp
  • 32. ... delivers a consistent set of financial statements.
  • 33. You can think of this conc ept...
  • 34. PORT...... as having a standardized
  • 35. ... with which you can link
  • 36. ... with which you can linkany BUSINESS to the LOGIC FINANCIALS
  • 37. With such a DRIVER-BASED PLANNING ...
  • 38. ... you can see the CONSEQUENCES of your DECISIONS
  • 39. before you take action in the REAL WORLD http://en.wikipedia.org/wiki/File:04KJER0243.jpg
  • 40. 2
  • 41. A PLANNINGthat doesn’t rely on ...
  • 42. SINGLE- POINT ESTIMATES
  • 43. SINGLE- POINT ESTIMATESrather than on the FULL RANGE of possible outcomes
  • 44. Becausein the REAL WORLD...
  • 45. ... the future is NOROADSTRAIGHT ...
  • 46. ... instead it’s full of UNCERTAINTY and RISK
  • 47. Therefore, the INPUTS of your planning model ...
  • 48. ... must not only contain the things you know with certainty ...
  • 49. la st ikearsl e y es f ig ur
  • 50. ... but also those things you dont know exactly ...
  • 51. the ent likelopm e arket pridev m ces of
  • 52. r the for o nddema ur products yo in the f uture
  • 53. Even for those things you dont know exactly, you can always define a range of possible values.
  • 54. So, the OUTPUT of the planning model ...
  • 55. ... shouldn’t look like THAT
  • 56. ... and NOT ONLY like TH AT
  • 57. ... and NOT ONLY like TH AT i.e. ju expec st value ted s
  • 58. Instead, you should see MUCH MORE ...
  • 59. Instead, you should see Probability bands showing the possible MUCH MORE ... range of future development
  • 60. Instead,Probabilityshould see the you density charts showing MUCH MORE ... relative likelihood of possible values
  • 61. Instead, you should functions showing Cumulated probability see MUCH MORE ... how likely a certain outcome is
  • 62. All these statistical views, along with others, are not only available for certain "key values"...
  • 63. ... but for every single item within the model.
  • 64. ... but for every singel item within the model.
  • 65. ... but for every single item within the model.
  • 66. ... but for every single item within the model.
  • 67. With such an EXPLICIT RISK ANALYSIS you can see how likely it is ...
  • 68. ... to achieve a desired result, ... ance % ch less 40 to earn 5m tha n €2
  • 69. ... to have enough headroom given your funding sources ... ntial bsta o su o g risk t upt bankr ear y he r next t e aft
  • 70. ... or whatever else you are interested in
  • 71. Because the ACTUAL INFORMATIONis in the MARGIN ...
  • 72. ... and not in the average www.flawofaverages.com
  • 73. ... and not in the average Like with the statistican who drowned crossing a river that was 3 ft. deep—on average. www.flawofaverages.com
  • 74. 3
  • 75. A VALUATIONthat doesn’t play with ...
  • 76. ... the DISCOUNT RATE ...
  • 77. ... to account for RISK ...
  • 78. ... rather than harnesses the INFORMATION RISK about we already have
  • 79. From our risk analysis, we not only know ...
  • 80. oba pr of blethe nce aria g. thev . e me Ne t I nco
  • 81. or the low e C as h FFre
  • 82. ... but every single scenario produced by the Monte Carlo simulation.
  • 83. Assuming we put every substantial risk carefully into our model ...
  • 84. s is hingthi eryt ev bly oba .t pr hat appen ca n h
  • 85. s is hing thi eryt ev bly oba . t pr hat appen na OK,cot nexhtl ac y these few samples, but runnin g somethousand simulationyou get pr s etty close ...
  • 86. Having captured all risk within the cash flows, there is no need to ...
  • 87. NPV ... use a % +% risk premiumto calculate net present value.
  • 88. NPV ... use a % +% risk premiumto calculate net present value.
  • 89. we canIn ste ad, us e as im ply ra te. k-f ree ris%
  • 90. % Discounting every scenario with the risk-free rateleads to a distribution of NPV.
  • 91. ? hats the B ut w % val ue airhaeveryioscenario f ftDiscounting t t n o st ribu with thedirisk-free rategives us a distribution of NPV.
  • 92. With an OPTION-BASED VALUATION , we can turn this distribution into a single VALUE
  • 93. So, mean?what does this
  • 94. Nothing less than:
  • 95. We canEVALUATE ...
  • 96. We canEVALUATE
  • 97. s conomic