2. Agenda
• Background
• Introduction: The Importance of your Financial Model
• The Basics
• Building the Top-Line
• Building the Bottom-Line
• Bringing it All Together
• Dos and Don’ts
• Conclusion
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3. Background
• Boticca is the world’s online destination for jewellery, bags and fashion
accessories made by carefully sourced independent designers and
small & medium brands from across the world
• We currently work with 370 brands from 40+ different countries and
offer over 11,000 different pieces for sale on the website on a curated
marketplace business model to customers in 60 different countries on
any given month
• A little bit on myself
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4. Introduction: The Importance of Your Financial Model
• The Financial Model is one of the key documents any entrepreneur
should look at as it allows you
– To set objectives and gives overall direction
– To pilot the business and run different case/scenarios
– To predict your cash runway and when you should be out raising cash
• The Financial Model is a living document whose future assumptions
should constantly be updated as you collect data
• Your ability to create a clear, understandable model with realistic
assumptions has huge sway on whether an investor or VC decides to
invest in your business
• If you’re hitting (or beating) your own projections, it gives you a lot of
confidence in your own predictability of your business
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5. The Basics
• A good model is generally simple and should have the following:
– A sheet that drives the top-line (sales/revenue/traffic etc.)
– A sheet that drives the bottom line (salaries/expenses/margins etc.)
– A sheet that brings both together to form an income statement with a
basic cash-flow statement to show your cash position at the end of each
month
– A one-page, simple yearly summary
• I’d recommend building the model monthly looking forward 3 years at
a minimum and 5 years at most
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6. Building the Top-Line
• The Top-Line drives the
assumptions to get to your revenue
figures
• It should include:
– Growth by traffic channel and the
assumptions to derive it if your
business is driven by traffic and
conversions like in ecommerce
– Sales by number of stockists if your
business sells its own
stock/product
– Sales by number of
clients/businesses signed if your
business sells to B2B or enterprise
• The Top-Line assumptions will be
different from business to business
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7. Building the Bottom-Line
• The Bottom-Line drives everything
below the revenue line and is
primarily composed of costs
• These include:
– Cost of goods sold
– Payment processing fees (if
ecommerce)
– Variable costs: marketing, PR,
advertising etc.
– Fixed costs: salaries/staff,
office/rent, travel etc.
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8. Bringing It All Together
• Put a simplified version of
the Top-Line at the top
• Put a simplified version of
the Bottom-Line
underneath it
• Get to an EBITDA figure
and basic cash-flow
statement at the bottom
• Add a summary page
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9. Dos and Don’ts
• Keep it simple
• Don’t over-engineer or complicate
– Too many assumptions
– Trying to much to model the “real world”
• Make sure that you can back your assumptions
• Always budget your costs higher than you think
– That’s the way it’s going to be!
• Avoid the hockey-stick: go for the ramp
– Investors are always weary of hockey stick type growth
– It’s better to ramp things up gradually
• Use colours
– Blue for anything that is hard-coded in or inputs
– Green for assumptions or numbers driven by assumptions
– Black for numbers driven by calculations
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10. Conclusion
• A well-built, strong financial model is an essential tool to raising
money from investors and piloting your business
• Your model is a living creature that needs to constantly be updated
with real data to constantly improve predictability which in turns gives
you confidence
• When raising from investors, don’t live and die by your model either
– An incredible product and/or experience for your customers will take you
very, very far…
#boticca
