2. • Why we need financial planning?
• What is financial planning?
• Revenue Model
• Assumptions
• Financial Statements / Projections
• Building a financial model
• The Wonders of Excel
Agenda
4. What is Financial Planning
Objective
/ Goals
• Set measurable goals
• Sales & Profit
• Timeline
Strategy
• Branding,
• Target Audience, Sales Channels
• Product development
Tactics
• Cost of implementation
• Need vs. Want
• Terms of business
Building numbers into marketing & operations
Goals & strategy feasibility
Guidance on changes needed
Strategic partnering & contract negotiations
5. Projections
• Revenue model
• Costs & Expenses
Monthly Financials
• Follow-up / Comparison
• Cash Position
• Timeline of Cash
Project Feasibility
• New products
• New markets
• Etc.
What is Financial Planning
• Income statement
• Balance Sheet
• Cash Flow
• Strategy
• Operations
• Partnerships
6. Goal setting … then work backwards
• How do you get there?
• How much cash will it take
• What is your timing
Target Market / Target list
• Consumer
• B2B
• Partners
Segments
• Keep it simple & FOCUS
• Prioritize
Assumptions
Revenue Model
7. Ass…U…Me
Assumptions
Everybody Must Make Assumptions
• Revenue
• Costs / Expenses
• Timing
Research
• Google, friends, surveys, other professionals
Eventually, “Just do it”
• Put it on paper
• Change if needed
Projections are never perfect
• Over or Below
11. The Financial Reporting Link
Income
Statement
Balance
Sheet
Cash Flow
− Revenue Numbers
− Costs & Expenses
− Match to timing of sales
− Leads to Net Income / Loss
− Net Income goes on the Balance Sheet
− Snap shot in time that shows assets & liabilities
− Assumptions of timing for collecting cash from
sales and paying expenses
− Change in assets and liabilities effects cash flow
− Starts with Net Income
− Changes in assets and liabilities
− Additions and pay back of equity and debt
− Ending cash goes back on the balance sheet
12. The Financial Reporting Link Cont’d
Income
Statement
Balance
Sheet
Cash Flow
− Sales, Costs, Expense
assumptions feed into IS
− Usually from other sheets
− Account Receivable/Payable days
− Inventory Days
− Debt & Equity
− Equipment purchases
− Income Statement &
Balance sheet are
brought together
13. • Complex vs. Simple
• Use Excel for flexibility and ease
– Calculations/Formulas, Drag
• Build assumptions that can be easily changed
• Think through revenue, costs, expenses
• All sheets should be integrated
Building a financial model
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Revenue 50 55 61 67 73 81 89 97 107 118 130 143 1069
Cost 25 28 30 33 37 40 44 49 54 59 65 71 535
Expenses 10 11 11 12 12 13 13 14 15 16 16 17 159
Net Profit 15 17 19 22 24 27 31 35 39 43 49 54 375
Growth 10%
Cost 50%
Expense Inflation 5%
Lori:
Drag months
and dates
Lori:
Assumptions
in yellow &
blue
14. Excel Wonders Cont’d
Growth Formulas
Growth of 10%
= previous month or year
multiplied by 1 + 10% growth
C4 = January Revenue
C9 = Growth Rate
The dollar sign (“$”) in front of a
column letter and or row number
grounds the column and row,
respectively.
17. • 5-Year financial plan:
– 2 years of monthly & following 3 annual
• Need Initial Data
– Can figure it out with CFO
– Still need CEO engagement
• Part-time or full-time CFO
– Full time not needed in the beginning
– Typical salary is from $120k - $200k, depending on factors
– Part-time CFO typical hourly rate is $170-$250
– Bookkeeping and senior accountant rates are lower
Data & Costs