Financial Modeling Services

1. The Financial Model
as a tool for management decision-making
and attracting external investors
You Ask – We Answer
© 2010

2. Why On Earth Do I Need a Financial Model?
Whether you are seeking funding from investors or
compiling a business plan to serve as a blueprint for
managing and monitoring your business, it is imperative
to make financial projections (a.k.a., a Financial Model).
Such financial projections attract investors and serve as a
guide to your future business decisions.

3. So.. Is It All About Numbers on a Spreadsheet?
Creating financial projections for your start-up or an existing venture is
both an art and a science. Investors want to see cold, hard numbers
such as Internal Rate of Return (IRR), Earnings Before Interest, Tax
Depreciation and Amortization (EBITDA). Yet, it is inherently
difficult to predict your financial performance 3 or 5 years down the
road particularly if you are attempting to raise seed capital in today’s
economy. Regardless, short- and medium-term financial projections are
required parts of your business plan if you want serious investors’
attention.

4. But I have a Great Idea – Still They Want Me To
Crunch Some Numbers?
We feel your pain - financial projections can be intimidating. However,
they are less a matter of mathematical aptitude and more a matter of
your knowledge of your business, the industry, and the market. Please
remember, there is a big difference between a Dream and a Business Idea.
In another words – investors want to be sure you know exactly what you
are doing and are fully capable of backing up your strategy with realistic
projections and market expectations. The sad truth – nobody is in a
position to finance your dream these days. On the bright side – we are
fully capable of transforming your dream into a business idea and
present it in the language accepted by the investment community to
increase your chances of a successful transaction.

5. How Do You Do It?
Profits equals Sales minus Costs is an example of a very simple
model for deriving projected profits from assumptions about
future sales and costs.
In practice, financial planning models are much more complex
as they must accommodate multiple time periods (months,
quarters and years) and handle hundreds of variables relating to
sales, costs etc. The volume of data mounts up very quickly
when each variable is multiplied by the time horizon, for
example, by twelve months.
By structuring key revenues and cost drivers and developing
mathematical formulas, we are able to forecast Accounts
Receivable (ARs) and Accounts Payable (APs) at any given
period and ultimately calculate the bottom line and key
investment metrics.

6. What Do I Get?
A Hands-on tool with fully integrated monthly income
statement, balance sheet, and cash flow statements for up to
3-5 years which is exclusively build for your unique business
model and enables you to:
A) independently evaluate different scenarios of your cash
flows and analyze your bottom line at any given period (even
if you are “not a numbers person”)
B) attract interest from the investment community and
speak their language

7. What are the Key Steps of Your Modeling Process?
STEP I STEP II STEP III
Gathering the Building the Projections Output
Information and Building Revenue page, Perform Sensitivity Analysis
Data Expenses page, Profit and Loss Charts
Interviews with the projections, Balance Sheet,
founders, CEO and CFO Cash Flow projections Summary Page: Annualized
to discuss the business Results and Key Investment
Building Working Capital Metrics
strategy and gather key projections and Financing page
model assumptions
Tax liability calculations
Identification of key
revenue’ and cost drivers Developing Scenarios:
Base/Best/Worst
Review of historical
financial data (if any)
Building the Assumption
Page
Base Model typically achieved within a 40-hour minimum engagement

8. What Does Our Financial Model Typically Contain?
Assumptions Page (Key Revenues and Costs Drivers)
Key Financial Indicators
Scenarios: ‘What-If’ Statements (Base/Best/Worst)
Investment Criteria Such as Valuation and IRR
Income Statement (P&L)
Balance Sheet
Cash Flow Sheet
Revenue Structure Considerations
Financing Structure Considerations
Charts

9. What Are The Key Numbers Investors Will Be
Looking At In My Financial Model?
Investors usually have several investment opportunities on their
plate (especially these days) and in order to make the investment
decision they have to size the current or potential financial
strength of your company. The key numbers they would look at:
EBITDA (Percentage)
Revenue Growth
Minimum and Maximum cash balances
Equity/Debt needs to fund company
Break-Even Point
Net Working Capital
Valuation as multiple of EBITDA
IRR

10. EXAMPLE: ABC Inc - P&L Projections

11. EXAMPLE: ABC Inc - Cash Flow Projections

12. EXAMPLE: ABC Inc - Balance Sheet

13. EXAMPLE: ABC - Key Investment Indicators

14. … and YES, you are in a good hands.
We consistently deliver Financial Models that are:
Built from scratch (no templates) specifically for your
business needs
Scenario-based in order to provide Key Investment Metrics
by use of ‘what-if statements’
Able to quantify significant changeable financial assumptions
for the present and future.
Example: “If I change Revenue Growth by X%, what is the impact on EBITDA
and Cash Flow & IRR?”
Flexible, sophisticated and dynamic yet simple enough to use
in-house by non-financial mangers.
Change the assumptions and see how the change affects your bottom line
See the cash flows’ dynamics and trends
As Financial Strategists and Consultants, we provide
assistance with implementation of any business idea.

15. Metropole Capital Group specializes in providing strategic
consulting and financial advisory services to small and medium-sized
businesses around the world at every stage of their business
development. MCG has established a captivating framework of
services helping client companies develop innovative business
strategies, assess their capital needs, determine financing options,
and successfully acquire start-up, working or growth capital. Our
core product is the Investment Solicitation Package which includes
a set of the documents necessary to present to the investment
community and includes: Business Plan, Financial Model,
Investment Power-Point Presentation and Investment/Offering
Memorandum.
THANK YOU!
www.metropolecapital.com