This document provides guidance on building a simple financial model for startups seeking investment. It discusses that investors want to see financial projections that show there is money to be made. It then covers the key components of building a financial model, including determining unit economics, revenue and cost assumptions over time, and constructing profit and loss statements. The document emphasizes translating the startup story into numbers and keeping projections within reasonable ranges compared to benchmarks.
This document provides information on various business models and concepts for startups. It discusses incubators that help new companies, different revenue models like freemium and subscription, the differences between SMEs and startups, stock options, fundraising rounds, and metrics like cost of customer acquisition and lifetime value. Pillars discuss the physical and online environment, business and financial models, and financial learning curves. Milestones cover incubation, designing revenue streams, sharing economy models, bait and hook, fundraising, stock options, and due diligence. Resources are suggested for startup services, databases, founder qualities, visual boards, templates, pitch decks, free photos, product market fit, and a youth summit. The overall goal mentioned is growth
This document provides an overview of key financial concepts for startups, including customer acquisition cost (CAC), lifetime value (LTV), the importance of showing CAC is less than LTV, how CAC and LTV depend on each other, what a profit and loss statement shows, how to calculate cash burn rate, how to determine how much money is needed to be raised, and what investors want to know. Key performance indicators discussed include CAC, LTV, and EBITDA.
The document provides an overview of unit economics concepts including understanding unit revenue, unit costs, and fixed costs. It discusses calculating unit profit, gross profit, profit margins, and how to build income statements and profit and loss statements. Examples are provided for calculating costs, revenues, profits and margins for hypothetical products over a five year period. The key information covered includes understanding the costs and revenues associated with individual units and how these figures scale up to provide overall business financial metrics.
(1) The document provides an overview of key financial concepts for startups, including profit and loss statements, balance sheets, and cash flow statements. (2) It notes that while established businesses have stable finances, startups have unstable business activities that require significant investment and negative cash flows in the early stages. (3) The document emphasizes that startups need to track metrics like cash burn rate, customer acquisition cost, and conversion rates to measure progress and attract investors.
This document discusses financing innovation and supporting innovative startups. It provides an overview of legislation in Italy that aims to promote innovative startups and their importance for economic growth. Specifically, it notes there is an estimated funding gap between the demand and supply of funding for innovative startups in Italy. It also outlines some of the benefits and opportunities provided by the Italian legislation for innovative startups, such as tax incentives and easier access to bank loans. Finally, it discusses common criteria for evaluating innovative startups and tech companies, such as evaluating the team and advisors, product development stage, addressable market, and economics.
This presentation discusses how to build an effective financial model for a business. A financial model shows revenues, profits, cash needs, hiring plans, and runway over a 5-year period. It also includes a sensitivity analysis. The model proves whether the business can make money and scale over time. The document provides guidance on building income statements, balance sheets, cash flow statements, and assumptions for revenues, costs, expenses, and headcount over multiple years. It cautions against underestimating costs and cash burn and stresses the importance of financial planning and oversight.
How to present your startup financials in just 3 slidesViola Group
This slide deck is part of a follow-on post by Carmel Ventures Partner Omry Ben David to his post on "5 Tips for building a financial plan for your startup (and why it’s more important for you than for your VCs)" http://bit.ly/2reLIB0
This investor presentation describes a company that has developed a product or service to fill a void or solve problems in its industry. It outlines the company's solution, competitive advantages, business model, go-to-market strategy, management team, and financial projections. The company is seeking a specific amount of funding in return for a percentage of ownership to support market entry and growth over the next five years.
This document provides information on various business models and concepts for startups. It discusses incubators that help new companies, different revenue models like freemium and subscription, the differences between SMEs and startups, stock options, fundraising rounds, and metrics like cost of customer acquisition and lifetime value. Pillars discuss the physical and online environment, business and financial models, and financial learning curves. Milestones cover incubation, designing revenue streams, sharing economy models, bait and hook, fundraising, stock options, and due diligence. Resources are suggested for startup services, databases, founder qualities, visual boards, templates, pitch decks, free photos, product market fit, and a youth summit. The overall goal mentioned is growth
This document provides an overview of key financial concepts for startups, including customer acquisition cost (CAC), lifetime value (LTV), the importance of showing CAC is less than LTV, how CAC and LTV depend on each other, what a profit and loss statement shows, how to calculate cash burn rate, how to determine how much money is needed to be raised, and what investors want to know. Key performance indicators discussed include CAC, LTV, and EBITDA.
The document provides an overview of unit economics concepts including understanding unit revenue, unit costs, and fixed costs. It discusses calculating unit profit, gross profit, profit margins, and how to build income statements and profit and loss statements. Examples are provided for calculating costs, revenues, profits and margins for hypothetical products over a five year period. The key information covered includes understanding the costs and revenues associated with individual units and how these figures scale up to provide overall business financial metrics.
(1) The document provides an overview of key financial concepts for startups, including profit and loss statements, balance sheets, and cash flow statements. (2) It notes that while established businesses have stable finances, startups have unstable business activities that require significant investment and negative cash flows in the early stages. (3) The document emphasizes that startups need to track metrics like cash burn rate, customer acquisition cost, and conversion rates to measure progress and attract investors.
This document discusses financing innovation and supporting innovative startups. It provides an overview of legislation in Italy that aims to promote innovative startups and their importance for economic growth. Specifically, it notes there is an estimated funding gap between the demand and supply of funding for innovative startups in Italy. It also outlines some of the benefits and opportunities provided by the Italian legislation for innovative startups, such as tax incentives and easier access to bank loans. Finally, it discusses common criteria for evaluating innovative startups and tech companies, such as evaluating the team and advisors, product development stage, addressable market, and economics.
This presentation discusses how to build an effective financial model for a business. A financial model shows revenues, profits, cash needs, hiring plans, and runway over a 5-year period. It also includes a sensitivity analysis. The model proves whether the business can make money and scale over time. The document provides guidance on building income statements, balance sheets, cash flow statements, and assumptions for revenues, costs, expenses, and headcount over multiple years. It cautions against underestimating costs and cash burn and stresses the importance of financial planning and oversight.
How to present your startup financials in just 3 slidesViola Group
This slide deck is part of a follow-on post by Carmel Ventures Partner Omry Ben David to his post on "5 Tips for building a financial plan for your startup (and why it’s more important for you than for your VCs)" http://bit.ly/2reLIB0
This investor presentation describes a company that has developed a product or service to fill a void or solve problems in its industry. It outlines the company's solution, competitive advantages, business model, go-to-market strategy, management team, and financial projections. The company is seeking a specific amount of funding in return for a percentage of ownership to support market entry and growth over the next five years.
The document discusses two approaches to building a business: the balance sheet (B/S) way and the profit & loss (P&L) way. The B/S approach involves spending money first to build assets before earning revenue, while the P&L approach focuses on generating revenue from the start and using profits to build assets later. Some examples of each type of business are provided. The advantages and disadvantages of each approach are then outlined in terms of financing, timelines, risk tolerance, and exit strategies. The document concludes by providing recommendations on which approach may be better suited for different entrepreneurial situations.
Ravi Belani gave a presentation on venture capital to the European Innovation Academy. He discussed the three main sources of cash for startups - revenue, debt, and equity investment. He explained how venture capitalists make money through management fees and carrying a percentage of profits. Belani provided examples of valuations and negotiation exercises. He covered key investment terms like pre-money valuation, option pools, liquidation preferences, and board composition.
a template that brings together the best of the best in startup pitch decks and presentations so you get funded - this is a content guide, not an artistic guide
Startup Valuation: from early to mature stagesTatiana Siyanko
Methods and approached to startup and company valuations.
Please be free to send me any additions/correction proposals.
Prepared for Startup&co lecture in Freud cafe, Kyiv, April 30, 2014
"Rewarding Talent: getting stock options right!” presented by Index VenturesTheFamily
Did you know that employees in EU startups own only half as much equity compared to US ones? (10% vs 20% by the time of exit). This is crazy when we know that talent is one of the key driver of Silicon Valley’s success!
Joining a startup is risky, yet too many startups fail to reward their team adequately. Some of this is caused by poor government policy, but there is much more that entrepreneurs can do. ✨
So Index Ventures, one of the most prestigious VC, took the matter into their own hands and wrote a comprehensive guide to stock options for EU startups! Dominic, Head of Talent at Index, will be with us to present their 16 best practices for the next-gen of European startups:
- How much to award to whom?
- When to make grants & how to communicate their potential value?
- How big should your ESOP be?
- What to do about promotions? High performers and leavers?
And many more!
Do yourself (and your team) a favour and learn the best way to attract & retain your best talent
** Dominic is working with Europe-based founders and senior executives across Index’s portfolio, on talent-related issues including assisting select executive searches, international expansion, building in-house talent operations, and providing functional expertise in various HR areas such as compensation and org design. Prior to joining Index, Dominic served twice as a Chief Operating Officer and has first-hand experience scaling companies between zero and 400 people.
The document discusses the importance of business plans and pitches for startups. It provides guidance on the key elements that should be included in a business plan, such as the executive summary, management team, product/service description, market analysis, financial plan, and growth plan. The document also outlines the four parts of an effective pitch: context, solution, business model, and ask. It recommends identifying the problem being solved, the solution, how the solution will reach the market and make money, and what is needed to succeed. The document aims to help startups develop compelling business plans and pitches to attract financing.
Converting an idea or a lab prototype into a real, customer-ready product is no simple task. Learn how to differentiate between the steps of product development, including research, design, implementation, testing, verification, validation, operations and maintenance.
A good pitch should do more than just say stuff about your business. It should present the compelling points briefly and in an order that is logical and engaging.
What makes a startup interesting for investors - A presentation by Prajakt RautNasscom Startups
At a recent pitch session organised by 10,000 Start-ups, founder of the The Hub for Startups and VP of the Indian Angel Network, Prajakt Raut gave a presentation to young start-ups telling them what makes a start-up interesting for investors.
Vlad Tislenko. Building startup. From idea to the marketIT Arena
This document defines what a startup is and provides guidance on how to effectively build and validate a startup business model. A startup is defined as a new business venture designed to develop and validate a scalable business model. The document discusses the importance of finding a co-founder, validating the problem-solution fit through customer interviews, building an MVP, and focusing on metrics like retention, LTV, and CAC to determine if the business model can scale. Effective funding options for startups like accelerators, angels, and VCs are also mentioned.
The Best Pitch Deck Format To Attract InvestorsBryce North
**Validated by real investors!**
Based on the Guy Kawaski format, this pitch deck layout has been proven over and over again and has helped many companies raise their investment round.
If you are looking to raise your seed round, impress investors, and build a high-quality investment deck, then make sure you follow this format. This is the best pitch deck template available today.
Find more great resources here --> www.dontbealittlepitch.com
These are some basic funding concepts (including valuation, pre-money, post-money & dilution) for early startup entrepreneurs and others who haven’t been exposed to Business and Finance.
As scout for the Exponential Creativity Fund at Fractured Atlas, I’m in the unique position of finding arts entrepreneurs to pitch to our impact investment fund, helping them prepare, and participating in the pitch sessions.
A strong pitch deck is an essential tool for those seeking investment. It facilitates informed and juicy dialogue around what really matters, and it empowers a potential investor to do the following:
Research your company before meeting with you in real time
Follow along during your pitch
Introduce you to others within their network by sharing your pitch deck
While most of the founders pitching to the Exponential Creativity Fund have strong pitch decks, there have been a few who have asked our advice on what to include. Recognizing that new entrepreneurs coming out of the arts & culture sector are likely more familiar with grant or marketing partnership proposals, and that an investment pitch deck is radically different, Fractured Atlas decided to create and share a pitch deck guide. Our intention is to help arts entrepreneurs think through and prepare to seek investment whether you are pitching to our fund, or elsewhere.
To learn more about how Fractured Atlas’ Exponential Creativity Fund, follow our journey here. https://blog.fracturedatlas.org/tagged/impact-investing
This document provides an outline for a 10 slide investor pitch deck. It includes suggestions for slide layouts, key questions to answer on each slide, and words of advice. The slides cover introducing the founder and product, defining the problem and solution, traction to date, market opportunity, competitive edge, team, fundraising details, why invest now, and a summary of 3 key points. The goal is to hook the audience, showcase growth and market potential, and make the case for why investors should back the company.
Zero to 100 - Part 7: The Role of the CEODavid Skok
Zero to 100 is a learning program from David Skok. It is a detailed instruction manual for how to take your startup from zero to $100m, with a particular focus on the area of building a go-to-market machine. So many of today’s founders come from a product or technical background, and have never been involved with sales and marketing. Right after starting their venture, they are hit with the huge problem of how to build their go-to-market organization and processes. It breaks the journey down into 9 steps, and explains why it is crucial not to skip steps in this journey in the rush to get ahead. The major emphasis of the course focuses on building a repeatable, scalable and profitable growth machine. Once you have that in place, you are ready to hit the gas and scale like crazy.
To see videos of the presentations, click here: https://www.forentrepreneurs.com/matrix-growth-academy-zero-to-100-videos/
The document provides tips for developing an effective fundraising presentation deck for venture capitalists. It recommends starting with the key reasons to invest upfront, using clear and concise slide titles as the main takeaway message for each slide, and decluttering slides to remove unnecessary text, images or colors. Financial projections should use a bottom-up market analysis approach rather than top-down projections, and financial details on slides should be laid out clearly while keeping the number of rows to seven or fewer.
Milestones That Get Investor Interest = TractionKelly Schwedland
This document outlines the key milestones and traction points for startup founders seeking funding, including developing an idea, creating a product, perfecting the business model, and expanding. It provides examples of what traction might look like at each stage, such as 100-1000 emails or potential customers when developing an idea, 10,000 downloads or 100 paying customers when creating a product, and metrics like customer acquisition costs less than 3 times lifetime value when perfecting the business model. The goal at each stage is described, such as validating assumptions when developing an idea or having a replicable and scalable business model when perfecting it. Sources of funding are also suggested for each phase, like friends and family early on or angels and venture capital later
This document discusses unit economics, which is the fundamental building block of any financial model. It examines unit revenue, unit costs, and fixed costs. Key aspects of unit economics include understanding the cost to produce and sell one unit, the unit profit calculated as unit price minus unit cost, and using unit sales to calculate gross profit. The document also discusses differentiating between variable costs that can be attributed to a specific unit, and fixed costs that remain constant regardless of units sold.
This document discusses unit economics and how they relate to different business models and revenue models. It begins by defining unit economics as the unit revenue minus unit costs to determine unit profit. It then provides examples of different business models like products, services, and trade that have different revenue models like one-time sales, hourly rates, and reselling. For each model, it outlines how to calculate the key unit metrics like unit price, unit cost, unit profit, and unit profit margin. Finally, it discusses derivative revenue models like subscriptions and how they are measured using customer acquisition cost and customer lifetime value rather than per unit metrics.
The document discusses two approaches to building a business: the balance sheet (B/S) way and the profit & loss (P&L) way. The B/S approach involves spending money first to build assets before earning revenue, while the P&L approach focuses on generating revenue from the start and using profits to build assets later. Some examples of each type of business are provided. The advantages and disadvantages of each approach are then outlined in terms of financing, timelines, risk tolerance, and exit strategies. The document concludes by providing recommendations on which approach may be better suited for different entrepreneurial situations.
Ravi Belani gave a presentation on venture capital to the European Innovation Academy. He discussed the three main sources of cash for startups - revenue, debt, and equity investment. He explained how venture capitalists make money through management fees and carrying a percentage of profits. Belani provided examples of valuations and negotiation exercises. He covered key investment terms like pre-money valuation, option pools, liquidation preferences, and board composition.
a template that brings together the best of the best in startup pitch decks and presentations so you get funded - this is a content guide, not an artistic guide
Startup Valuation: from early to mature stagesTatiana Siyanko
Methods and approached to startup and company valuations.
Please be free to send me any additions/correction proposals.
Prepared for Startup&co lecture in Freud cafe, Kyiv, April 30, 2014
"Rewarding Talent: getting stock options right!” presented by Index VenturesTheFamily
Did you know that employees in EU startups own only half as much equity compared to US ones? (10% vs 20% by the time of exit). This is crazy when we know that talent is one of the key driver of Silicon Valley’s success!
Joining a startup is risky, yet too many startups fail to reward their team adequately. Some of this is caused by poor government policy, but there is much more that entrepreneurs can do. ✨
So Index Ventures, one of the most prestigious VC, took the matter into their own hands and wrote a comprehensive guide to stock options for EU startups! Dominic, Head of Talent at Index, will be with us to present their 16 best practices for the next-gen of European startups:
- How much to award to whom?
- When to make grants & how to communicate their potential value?
- How big should your ESOP be?
- What to do about promotions? High performers and leavers?
And many more!
Do yourself (and your team) a favour and learn the best way to attract & retain your best talent
** Dominic is working with Europe-based founders and senior executives across Index’s portfolio, on talent-related issues including assisting select executive searches, international expansion, building in-house talent operations, and providing functional expertise in various HR areas such as compensation and org design. Prior to joining Index, Dominic served twice as a Chief Operating Officer and has first-hand experience scaling companies between zero and 400 people.
The document discusses the importance of business plans and pitches for startups. It provides guidance on the key elements that should be included in a business plan, such as the executive summary, management team, product/service description, market analysis, financial plan, and growth plan. The document also outlines the four parts of an effective pitch: context, solution, business model, and ask. It recommends identifying the problem being solved, the solution, how the solution will reach the market and make money, and what is needed to succeed. The document aims to help startups develop compelling business plans and pitches to attract financing.
Converting an idea or a lab prototype into a real, customer-ready product is no simple task. Learn how to differentiate between the steps of product development, including research, design, implementation, testing, verification, validation, operations and maintenance.
A good pitch should do more than just say stuff about your business. It should present the compelling points briefly and in an order that is logical and engaging.
What makes a startup interesting for investors - A presentation by Prajakt RautNasscom Startups
At a recent pitch session organised by 10,000 Start-ups, founder of the The Hub for Startups and VP of the Indian Angel Network, Prajakt Raut gave a presentation to young start-ups telling them what makes a start-up interesting for investors.
Vlad Tislenko. Building startup. From idea to the marketIT Arena
This document defines what a startup is and provides guidance on how to effectively build and validate a startup business model. A startup is defined as a new business venture designed to develop and validate a scalable business model. The document discusses the importance of finding a co-founder, validating the problem-solution fit through customer interviews, building an MVP, and focusing on metrics like retention, LTV, and CAC to determine if the business model can scale. Effective funding options for startups like accelerators, angels, and VCs are also mentioned.
The Best Pitch Deck Format To Attract InvestorsBryce North
**Validated by real investors!**
Based on the Guy Kawaski format, this pitch deck layout has been proven over and over again and has helped many companies raise their investment round.
If you are looking to raise your seed round, impress investors, and build a high-quality investment deck, then make sure you follow this format. This is the best pitch deck template available today.
Find more great resources here --> www.dontbealittlepitch.com
These are some basic funding concepts (including valuation, pre-money, post-money & dilution) for early startup entrepreneurs and others who haven’t been exposed to Business and Finance.
As scout for the Exponential Creativity Fund at Fractured Atlas, I’m in the unique position of finding arts entrepreneurs to pitch to our impact investment fund, helping them prepare, and participating in the pitch sessions.
A strong pitch deck is an essential tool for those seeking investment. It facilitates informed and juicy dialogue around what really matters, and it empowers a potential investor to do the following:
Research your company before meeting with you in real time
Follow along during your pitch
Introduce you to others within their network by sharing your pitch deck
While most of the founders pitching to the Exponential Creativity Fund have strong pitch decks, there have been a few who have asked our advice on what to include. Recognizing that new entrepreneurs coming out of the arts & culture sector are likely more familiar with grant or marketing partnership proposals, and that an investment pitch deck is radically different, Fractured Atlas decided to create and share a pitch deck guide. Our intention is to help arts entrepreneurs think through and prepare to seek investment whether you are pitching to our fund, or elsewhere.
To learn more about how Fractured Atlas’ Exponential Creativity Fund, follow our journey here. https://blog.fracturedatlas.org/tagged/impact-investing
This document provides an outline for a 10 slide investor pitch deck. It includes suggestions for slide layouts, key questions to answer on each slide, and words of advice. The slides cover introducing the founder and product, defining the problem and solution, traction to date, market opportunity, competitive edge, team, fundraising details, why invest now, and a summary of 3 key points. The goal is to hook the audience, showcase growth and market potential, and make the case for why investors should back the company.
Zero to 100 - Part 7: The Role of the CEODavid Skok
Zero to 100 is a learning program from David Skok. It is a detailed instruction manual for how to take your startup from zero to $100m, with a particular focus on the area of building a go-to-market machine. So many of today’s founders come from a product or technical background, and have never been involved with sales and marketing. Right after starting their venture, they are hit with the huge problem of how to build their go-to-market organization and processes. It breaks the journey down into 9 steps, and explains why it is crucial not to skip steps in this journey in the rush to get ahead. The major emphasis of the course focuses on building a repeatable, scalable and profitable growth machine. Once you have that in place, you are ready to hit the gas and scale like crazy.
To see videos of the presentations, click here: https://www.forentrepreneurs.com/matrix-growth-academy-zero-to-100-videos/
The document provides tips for developing an effective fundraising presentation deck for venture capitalists. It recommends starting with the key reasons to invest upfront, using clear and concise slide titles as the main takeaway message for each slide, and decluttering slides to remove unnecessary text, images or colors. Financial projections should use a bottom-up market analysis approach rather than top-down projections, and financial details on slides should be laid out clearly while keeping the number of rows to seven or fewer.
Milestones That Get Investor Interest = TractionKelly Schwedland
This document outlines the key milestones and traction points for startup founders seeking funding, including developing an idea, creating a product, perfecting the business model, and expanding. It provides examples of what traction might look like at each stage, such as 100-1000 emails or potential customers when developing an idea, 10,000 downloads or 100 paying customers when creating a product, and metrics like customer acquisition costs less than 3 times lifetime value when perfecting the business model. The goal at each stage is described, such as validating assumptions when developing an idea or having a replicable and scalable business model when perfecting it. Sources of funding are also suggested for each phase, like friends and family early on or angels and venture capital later
This document discusses unit economics, which is the fundamental building block of any financial model. It examines unit revenue, unit costs, and fixed costs. Key aspects of unit economics include understanding the cost to produce and sell one unit, the unit profit calculated as unit price minus unit cost, and using unit sales to calculate gross profit. The document also discusses differentiating between variable costs that can be attributed to a specific unit, and fixed costs that remain constant regardless of units sold.
This document discusses unit economics and how they relate to different business models and revenue models. It begins by defining unit economics as the unit revenue minus unit costs to determine unit profit. It then provides examples of different business models like products, services, and trade that have different revenue models like one-time sales, hourly rates, and reselling. For each model, it outlines how to calculate the key unit metrics like unit price, unit cost, unit profit, and unit profit margin. Finally, it discusses derivative revenue models like subscriptions and how they are measured using customer acquisition cost and customer lifetime value rather than per unit metrics.
This document discusses ways for businesses to measure and increase profit. It defines profit as total sales minus total costs. Businesses can measure profit in absolute terms as the total value, or relatively as a percentage of sales or return on capital invested. The net profit margin and return on capital are key metrics. Ways to increase profit include increasing sales volume or price, reducing variable or fixed costs, and focusing on core operations. Profit and cash flow differ in their timing due to credit terms, fixed asset accounting, and depreciation.
The document discusses break-even analysis, which is a key element of marketing plans. It defines break-even analysis as the number of units a business must sell to cover its fixed costs. The document provides an example calculation showing how to determine break-even units. It also notes that break-even analysis helps businesses understand what price and sales volume are needed to start generating a profit. However, break-even analysis becomes more difficult when a business has multiple products or services.
This document discusses the key differences between managerial accounting and financial accounting. Managerial accounting provides internal information for managers to use for planning, directing, monitoring and controlling operations, while financial accounting provides external information to stakeholders. It also discusses decision-making tools in managerial accounting like contribution margin and break-even analysis which are used to evaluate product lines and determine the sales volume needed to cover total costs.
This document discusses break-even analysis, which is used to determine the sales volume needed to cover total costs. It provides examples of calculating break-even units. The break-even point is where total revenue equals total costs, resulting in no profit or loss. Conducting a break-even analysis helps businesses understand how many units they need to sell to break even and determine if their marketing plan is affordable. It also shows how profits increase with additional sales above the break-even level.
How to break through the million dollar level and beyond in 2013PCO Bookkeepers
This document provides guidance on growing a business beyond $1 million in annual revenue. It discusses measuring business performance in key areas like finances, marketing, sales and operations. For finances, it recommends tracking revenue by department, costs, margins, expenses and ratios. For marketing, it covers the 4 P's - product, price, place and promotion. For sales, it lists important metrics like leads, proposals, closing rates and compensation. For operations, it emphasizes effective routing to increase revenue and efficiency while lowering expenses and labor costs. The overall message is that businesses must plan growth, set goals and closely monitor key performance indicators.
The document discusses a cost plus model for remunerating business partners or distributors. It proposes a 5 step process: 1) identify required services, 2) identify structure to deliver services, 3) determine costs of structure and services, 4) ensure distributor basic profit relates to costs incurred, 5) determine sales levels to calculate commissions. Additional profit is tied to achieving key performance indicators to incentivize cost reduction and growth while ensuring equitable remuneration.
BlueBookAcademy.com - How to value companies Using Multiplesbluebookacademy
Relative valuation involves comparing a company's valuation multiples to other similar companies. There are two main types of multiples - enterprise value multiples that use earnings above debt, and equity value multiples that use earnings below debt. Common multiples include EV/Sales, EV/EBITDA, and P/E ratio. To properly use multiples, comparable companies must be selected based on factors like size, industry, and profitability. While multiples provide an easy way to value companies, they have limitations such as oversimplifying comparisons between companies.
This document summarizes a seminar on pricing strategies for businesses. The seminar covered topics such as setting the right price, pricing for profit and cashflow, common pricing mistakes, and avoiding price wars. It provided tools for businesses to understand their costs, customer value, competitors' prices, and develop an effective pricing strategy. The document encourages participants to identify actions they will take as a result of the seminar and things they have learned. It also provides information on free business mentoring sessions.
This document discusses various key performance indicators (KPIs) that businesses can use to measure and analyze their performance, including:
- Break even point, which is the revenue at which costs and revenues are equal
- Turn rate, which measures how quickly inventory is selling through
- Gross margin return on investment (GMROI), which relates gross profit dollars to average inventory levels
- Delivered sales per square foot, which measures sales productivity of floor space
- Percent of repeat customers, which indicates customer loyalty and satisfaction
- Net delivery cost percentage, which measures delivery expenses relative to sales
- Change in cash, which tracks cash flow trends over time.
The document emphasizes that KPIs allow businesses to better understand
CO2 Presentation - The Largest Profit LeversCoalmarch
Take a deep dive with master bookkeeper Dan Gordon, as he explains what tools to use, business organization strategies that include systems, procedures checklists, and more. Learn the tricks of accounting automation that will help you move the profit needle for your company.
CO2 2019 | Dan Gordon | Budgeting for GrowthCoalmarch
Budgeting for Growth is a workshop about building a profitable company using budgets. It discusses what a budget is, why businesses create budgets, how to forecast revenues, and how to budget for direct costs, gross margin, sales and marketing expenses, general and administrative costs, and net income. The presentation emphasizes calculating the lifetime value of a customer to determine how much should be spent on marketing to acquire new customers.
The document discusses the concept of profit point and how businesses can use it to thrive rather than just survive or dive. It defines profit point as the revenue level needed to cover fixed costs. It then outlines five key steps businesses can take: 1) Know your numbers, 2) Set your course, 3) Create opportunities, 4) Sell for profit, and 5) Manage the work. Following these steps and understanding profit point allows businesses to increase sales and profits.
techniques to measure and enhance profitability and quality of a product or ...sarthakjain218
This document discusses various techniques to measure corporate performance, quality, and profitability. It outlines ratios and analyses that can be used to measure profitability, including margin ratios, return on assets, return on investment, and break-even analysis. Break-even analysis in particular calculates the sales volume needed to cover total costs. The document also discusses techniques for enhancing quality and profitability, such as increasing sales, controlling costs, reducing waste, and benchmarking quality metrics.
This document discusses break even analysis, which determines the sales volume needed for a business to make a profit. It explains that break even analysis helps managers make informed decisions about new products, equipment, and pricing. The document provides the algebraic formula for calculating break even point and illustrates break even analysis for a company called Surf. Examples are given of Rajiv Gandhi Setu bridge, which fell short of its break even daily collection target, and Jumbo King Vada Pav restaurants, which achieved success and sustained profits through strategic franchise expansion near railway stations.
Marketing metrics control@5 5-07-to be distributedRandy Hawthorne
Marketing metrics are used to assess the success of marketing plans and objectives, monitor progress, understand discrepancies, and provide direction for adjustments. Common metrics include costs and values of prospects and customers, ROI of campaigns, conversion and response rates, brand awareness, market share, and sales. Control in marketing is important to compare actual performance to plans, understand where discrepancies occur, and recognize changing conditions. The steps in control are to measure actual performance, compare to objectives, and make adjustments based on analysis.
To get the best results from implementing RESULTS.com, we recommend that you start by getting clear on the key numbers that will drive your success.
Research shows that (unfortunately) 92% of companies do a poor job of measuring Key Performance Indicators (KPI's). If that sounds like you, we can definitely help!
What are the key numbers that will drive and predict the success of your current business model? Your teams? Your key people?
Choosing the right KPI's (and making them visible) tells your people what they need to pay attention to. In other words, KPI's drive the right behaviors.
This workshop will help you choose the key numbers that will help you identify problems early, and solve them fast. If you get these numbers right, they will drive better financial results!
Marginal costing is a technique that uses the concept of marginal cost, which is the change in total cost from producing one additional unit. It involves separating total costs into fixed and variable costs. Contribution margin is the difference between selling price and variable cost per unit, and shows the amount available to cover fixed costs and generate profit. Cost-volume-profit (CVP) analysis examines how costs, revenue, and profit change with production volume. It can be used to determine the break-even point and plan production levels required to achieve profit targets. Managers use CVP to make decisions about pricing, production, investment, and financing.
The document discusses various financial considerations for starting and running a business, including:
1) Revenue streams like asset sales, fees, renting/leasing, and types of payments;
2) Startup costs such as materials, equipment, and 3 months rent;
3) Ongoing costs like payroll, taxes, utilities, and inventory;
4) Budgeting to forecast cash flows; and
5) Sources of funding like bootstrapping, loans, and investors.
Similar to APIA2018 - Rick Rasmussen - Building a Financial Model (20)
The document discusses different funding avenues for startups including grants, equity, debt, and revenue. It covers venture capital, angel investing, equity crowdfunding, SBA loans, bank loans, and factoring. It notes that VC/angel funding provides fast access to capital and strategic help but requires giving up control and pressure to grow. Debt options retain control but are hard to qualify for. The document also discusses term sheets, deciding how much to raise and at what valuation, additional terms, board composition, information rights, and pro rata rights for seed stage investors.
The document discusses the benefits of exercise for both physical and mental health. It notes that regular exercise can reduce the risk of diseases like heart disease and diabetes, improve mood, and reduce feelings of stress and anxiety. Staying active is an important part of an overall healthy lifestyle.
The document outlines Tomás Caeiro's workshop on crafting an effective pitch deck. The workshop agenda includes defining what a pitch and pitch deck are, pitch secrets and goals, and pitch format and structure. The presentation covers communicating something to someone to achieve a goal, different types of pitches, and the importance of practice, planning and anticipating questions. It provides guidance on pitch elements like problem, solution, competitors, marketing, business model and metrics. Bonus tips are given on dos and don'ts of pitching, including knowing your audience, competitor, and not giving false information.
Startup Financials is a document from 2023 created by Daniel Vila Boa in Porto, Portugal. It likely contains financial projections, funding requirements, and other key metrics for a new business venture. The short document focuses on the essential details needed to understand the financial situation of the startup.
The document discusses business models and how to choose one. It defines different types of business models like B2C, B2B, B2B2C and provides examples like Refinery 29 and SAAS. When choosing a model, factors to consider include predictable revenue, scalability, network effects and customer acquisition. The document recommends learning about customer needs through interviews and experiments to help identify the right model and business strategy.
Sales techniques focus on controlling the customer through rapport building to influence their acceptance while keeping explanations simple so confused customers will buy. Successful sales require putting knowledge into practice by controlling conversations, influencing customers and gaining their acceptance.
The document provides tips for zero-budget marketing for startups. It recommends creating content on various social media platforms like LinkedIn, Instagram, Twitter, and TikTok as the easiest marketing hack, with the platform choice depending on the business's product and audience. It also quotes Tim Huelskamp, who advises optimizing the product first so it delivers exceptional value to users, which will lead to natural growth through word-of-mouth. The document also includes contact information for Krissie McMenamin.
This document provides dos and don'ts for startups when approaching big corporations. It notes that corporations have resources startups need but also myths on both sides. The document advises startups to show working prototypes, know that "maybe later" means no, have founders do initial sales, and prepare for more admin work. It warns against wasting time on "innovation theatre" and being a liability. For corporations, it says to have a real problem startups can solve, empower engagement, and have a venture strategy. Overall, it encourages entrepreneurs to pursue startups but with a safety net of skills, experience, and savings first.
The document provides tips for scaling a startup using SEO and AI with no money down. It discusses optimizing the domain name, folder structure, and subdomains. It also covers keyword research, on-page SEO like using topic clusters, generating content, getting backlinks, and launching the website by registering it on various search engines and platforms. Useful tools and resources for SEO are also listed.
The document provides guidance on how to optimize landing pages to convert more visitors into customers, including structuring pages with a clear call-to-action at the top, using compelling headers and subheaders in the hero section to convey the main benefits of the product, and incorporating social proof and value propositions to encourage conversion. It emphasizes focusing the message and designing the page to enhance understanding of how the product fulfills customer needs and addresses any objections they may have.
This document discusses the science of art and emotion. It introduces Emotional DataTM which is collected data about consumers' unconscious emotional responses that can be observed and evaluated. It then describes different types of consumer data and how Emotional DataTM differs from qualitative and quantitative data. Finally, it outlines some simple neuroscience testing methods that can be used to collect Emotional DataTM including using iPhone and Apple Watch features to predict and infer mood and collect behavioral and preferential data.
The document discusses the benefits of exercise for mental health. Regular physical activity can help reduce anxiety and depression and improve mood and cognitive functioning. Exercise causes chemical changes in the brain that may help protect against mental illness and improve symptoms.
This document discusses tools for winning first customers, focusing on the importance of a growth mindset and growth hacking. It emphasizes embracing failure as an opportunity to learn and gain experience. Growth hacking involves testing innovative marketing techniques to rapidly grow a customer base with minimal resources. The key is understanding customers - who they are, where they spend time, what interests them - and then finding creative ways to reach them through content, blogs, emails, groups, influencers and more. There are no shortcuts; success requires testing ideas, learning from results, and continual improvement through an openness to feedback and new challenges.
1. Finding product-market fit requires consistently generating more revenue per customer than it costs to acquire and support that customer.
2. Startups that achieve product-market fit see their products "sell themselves" through word-of-mouth as users find intuitive value and are willing to justify friction.
3. True product-market fit is evident through high retention rates that show users would be disappointed without the product.
The document discusses various revenue models for businesses. It describes traditional models like product/service sales, subscriptions, freemium, and advertising. It also covers innovative models like razor and blades, shared economy, pay-what-you-want, dynamic pricing, tokenization, API-as-a-product, and data monetization. The document provides examples of companies using different revenue streams and advises businesses to understand their customers, market, offerings, costs, experiment, and consider scalability when choosing a revenue model.
1. Finding product-market fit requires building a product that solves a real problem for a specific market. Startups should focus on finding a small market that has a strong need that their minimum viable product can address, rather than trying to serve a large market initially.
2. Early signals that product-market fit may be achieved include visible excitement from potential customers when seeing demonstrations, and willingness from some customers to pay for the product before it's complete. Gathering feedback from potential customers is key to iteratively understanding their needs and refining the product.
3. Once product-market fit is achieved, the product will experience rapid growth through word-of-mouth, with users actively inviting others and usage growing quickly.
The document discusses building a successful team with diversity in gender, culture, education, interests, and skills. It recommends teams of five people and advises treating teamwork like dating by staying curious, asking questions, and respecting cultural differences. The document also encourages participants to focus on the team over any single idea, take quick action during the event, have fun, and make the most of talks and mentors.
This document contains information about Anna De Stefano and her work helping startups. It discusses her background creating a successful legal publishing company and mentoring over 30 startups. It provides tips for startups including focusing on defining problems precisely, listening, adapting, and ensuring their solution is better than competitors. It also outlines the main business models of B2C, B2B, and their variations.
The document discusses the principles and process of design thinking. It explains that design thinking involves discovering customer needs through research, defining the core problem to address, developing solutions through prototyping, and delivering the best solution. The design thinking process is illustrated as a "double diamond" with phases of discovery, definition, development, and delivery. Empathy with customers is emphasized to understand their context, needs, and experiences rather than focusing on preconceived solutions.
Unlock the Future of Search with MongoDB Atlas_ Vector Search Unleashed.pdfMalak Abu Hammad
Discover how MongoDB Atlas and vector search technology can revolutionize your application's search capabilities. This comprehensive presentation covers:
* What is Vector Search?
* Importance and benefits of vector search
* Practical use cases across various industries
* Step-by-step implementation guide
* Live demos with code snippets
* Enhancing LLM capabilities with vector search
* Best practices and optimization strategies
Perfect for developers, AI enthusiasts, and tech leaders. Learn how to leverage MongoDB Atlas to deliver highly relevant, context-aware search results, transforming your data retrieval process. Stay ahead in tech innovation and maximize the potential of your applications.
#MongoDB #VectorSearch #AI #SemanticSearch #TechInnovation #DataScience #LLM #MachineLearning #SearchTechnology
For the full video of this presentation, please visit: https://www.edge-ai-vision.com/2024/06/building-and-scaling-ai-applications-with-the-nx-ai-manager-a-presentation-from-network-optix/
Robin van Emden, Senior Director of Data Science at Network Optix, presents the “Building and Scaling AI Applications with the Nx AI Manager,” tutorial at the May 2024 Embedded Vision Summit.
In this presentation, van Emden covers the basics of scaling edge AI solutions using the Nx tool kit. He emphasizes the process of developing AI models and deploying them globally. He also showcases the conversion of AI models and the creation of effective edge AI pipelines, with a focus on pre-processing, model conversion, selecting the appropriate inference engine for the target hardware and post-processing.
van Emden shows how Nx can simplify the developer’s life and facilitate a rapid transition from concept to production-ready applications.He provides valuable insights into developing scalable and efficient edge AI solutions, with a strong focus on practical implementation.
A tale of scale & speed: How the US Navy is enabling software delivery from l...sonjaschweigert1
Rapid and secure feature delivery is a goal across every application team and every branch of the DoD. The Navy’s DevSecOps platform, Party Barge, has achieved:
- Reduction in onboarding time from 5 weeks to 1 day
- Improved developer experience and productivity through actionable findings and reduction of false positives
- Maintenance of superior security standards and inherent policy enforcement with Authorization to Operate (ATO)
Development teams can ship efficiently and ensure applications are cyber ready for Navy Authorizing Officials (AOs). In this webinar, Sigma Defense and Anchore will give attendees a look behind the scenes and demo secure pipeline automation and security artifacts that speed up application ATO and time to production.
We will cover:
- How to remove silos in DevSecOps
- How to build efficient development pipeline roles and component templates
- How to deliver security artifacts that matter for ATO’s (SBOMs, vulnerability reports, and policy evidence)
- How to streamline operations with automated policy checks on container images
Sudheer Mechineni, Head of Application Frameworks, Standard Chartered Bank
Discover how Standard Chartered Bank harnessed the power of Neo4j to transform complex data access challenges into a dynamic, scalable graph database solution. This keynote will cover their journey from initial adoption to deploying a fully automated, enterprise-grade causal cluster, highlighting key strategies for modelling organisational changes and ensuring robust disaster recovery. Learn how these innovations have not only enhanced Standard Chartered Bank’s data infrastructure but also positioned them as pioneers in the banking sector’s adoption of graph technology.
Introducing Milvus Lite: Easy-to-Install, Easy-to-Use vector database for you...Zilliz
Join us to introduce Milvus Lite, a vector database that can run on notebooks and laptops, share the same API with Milvus, and integrate with every popular GenAI framework. This webinar is perfect for developers seeking easy-to-use, well-integrated vector databases for their GenAI apps.
GraphSummit Singapore | The Art of the Possible with Graph - Q2 2024Neo4j
Neha Bajwa, Vice President of Product Marketing, Neo4j
Join us as we explore breakthrough innovations enabled by interconnected data and AI. Discover firsthand how organizations use relationships in data to uncover contextual insights and solve our most pressing challenges – from optimizing supply chains, detecting fraud, and improving customer experiences to accelerating drug discoveries.
Pushing the limits of ePRTC: 100ns holdover for 100 daysAdtran
At WSTS 2024, Alon Stern explored the topic of parametric holdover and explained how recent research findings can be implemented in real-world PNT networks to achieve 100 nanoseconds of accuracy for up to 100 days.
Let's Integrate MuleSoft RPA, COMPOSER, APM with AWS IDP along with Slackshyamraj55
Discover the seamless integration of RPA (Robotic Process Automation), COMPOSER, and APM with AWS IDP enhanced with Slack notifications. Explore how these technologies converge to streamline workflows, optimize performance, and ensure secure access, all while leveraging the power of AWS IDP and real-time communication via Slack notifications.
How to Get CNIC Information System with Paksim Ga.pptxdanishmna97
Pakdata Cf is a groundbreaking system designed to streamline and facilitate access to CNIC information. This innovative platform leverages advanced technology to provide users with efficient and secure access to their CNIC details.
UiPath Test Automation using UiPath Test Suite series, part 5DianaGray10
Welcome to UiPath Test Automation using UiPath Test Suite series part 5. In this session, we will cover CI/CD with devops.
Topics covered:
CI/CD with in UiPath
End-to-end overview of CI/CD pipeline with Azure devops
Speaker:
Lyndsey Byblow, Test Suite Sales Engineer @ UiPath, Inc.
Unlocking Productivity: Leveraging the Potential of Copilot in Microsoft 365, a presentation by Christoforos Vlachos, Senior Solutions Manager – Modern Workplace, Uni Systems
Threats to mobile devices are more prevalent and increasing in scope and complexity. Users of mobile devices desire to take full advantage of the features
available on those devices, but many of the features provide convenience and capability but sacrifice security. This best practices guide outlines steps the users can take to better protect personal devices and information.
Communications Mining Series - Zero to Hero - Session 1DianaGray10
This session provides introduction to UiPath Communication Mining, importance and platform overview. You will acquire a good understand of the phases in Communication Mining as we go over the platform with you. Topics covered:
• Communication Mining Overview
• Why is it important?
• How can it help today’s business and the benefits
• Phases in Communication Mining
• Demo on Platform overview
• Q/A
TrustArc Webinar - 2024 Global Privacy SurveyTrustArc
How does your privacy program stack up against your peers? What challenges are privacy teams tackling and prioritizing in 2024?
In the fifth annual Global Privacy Benchmarks Survey, we asked over 1,800 global privacy professionals and business executives to share their perspectives on the current state of privacy inside and outside of their organizations. This year’s report focused on emerging areas of importance for privacy and compliance professionals, including considerations and implications of Artificial Intelligence (AI) technologies, building brand trust, and different approaches for achieving higher privacy competence scores.
See how organizational priorities and strategic approaches to data security and privacy are evolving around the globe.
This webinar will review:
- The top 10 privacy insights from the fifth annual Global Privacy Benchmarks Survey
- The top challenges for privacy leaders, practitioners, and organizations in 2024
- Key themes to consider in developing and maintaining your privacy program
2. START UP FINANCIAL MODELS
Investors don’t put their money into ideas.
They put their money into businesses…
Your financial model is your ‘real’ business plan
Revenues
Profits
Cash needs
Hiring plans
Burn Rate, Runway
2
3. WHAT DO VCS WANT?
What you pitch
Unmet need
Solution
Market size
Product-Market Fit
Go-to Market
Team
Competition
Financial projections
Ask
4. WHAT DO VCS WANT?
What you pitch
Unmet need
Solution
Market size
Product-Market Fit
Go-to Market
Team
Competition
Financial projections
Ask
What they hear
Is there money to be made?
How much money can we make?
Are these the people who will
make me money?
5. INVESTORS EXPECT:
A 5-year Profit & Loss (P&L)
A simplified Income Statement
Broken out by Year in the presentation
6. HOW CAN YOU DO THIS?
You’re predicting the future
With little or no real evidence
Trying to reassure investors
that your guesses are valid
6
7. TELL A STORY
Startup financials are your
story expressed in numbers
Build out your story and then
translate
7
8. THREE FINANCIAL STATEMENTS
Balance Sheet: A "snapshot”
Assets vs. Liabilities
At a specific time
Income Statement: A “video”
Measures Financial Health
Income vs. Expenses
Over a period of time
Cash Flow Statement: Shows effects on Cash
based on Balance Sheet and Income Statement accounts
9. THREE FINANCIAL STATEMENTS
Balance Sheet: A "snapshot”
Assets vs. Liabiliities
At a specific time
Income Statement: A “video”
Measures Financial Health
Income vs. Expenses
Over a period of time
Cash Flow Statement: Shows effects on Cash
based on Balance Sheet and Income Statement accounts
10. THREE FINANCIAL STATEMENTS
Balance Sheet: A "snapshot”
Assets vs. Liabiliities
At a specific time
Income Statement: A “video”
Measures Financial Health
Income vs. Expenses
Over a period of time
Cash Flow Statement: Shows effects on Cash
based on Balance Sheet and Income Statement accounts
Non-rigorous version
often called a
Profit & Loss Statement
or P&L
13. P&L: BASIC STRUCTURE
Revenue
- Cost of Goods Sold (Variable costs)
= Gross Profit (Rev – COGS)
Gross Profit
- Expenses (Fixed Costs)
R&D
Sales and Mktg
General and Administrative (G&A)
= Net Profit [Gross Profit - Expenses]
.
14. P&L: BASIC STRUCTURE
Revenue
- Cost of Goods Sold (Variable costs)
= Gross Profit (Rev – COGS)
Gross Profit
- Expenses (Fixed Costs)
R&D
Sales and Mktg
General and Administrative (G&A)
= Net Profit [Gross Profit - Expenses]
+/- Other Income (expense)
= Net Income
15. THREE THINGS TO FIGURE OUT…
Revenue
- Cost of Goods Sold (Variable costs)
= Gross Profit (Rev – COGS)
Gross Profit
- Expenses (Fixed Costs)
R&D
Sales and Mktg
General and Administrative (G&A)
= Net Profit [Gross Profit - Expenses]
+/- Other Income (expense)
= Net Income
17. HOW DO YOU DO THIS?
17
in $M Yr 1 Yr 2 Yr 3 Yr 4 Yr 5
Revenue $0.1 2.5 $17.4 $31.5 $49.2
COGS 0.2 1.0 7.2 11.8 16.4
Gross
Profit
(.02) 1.4 10.1 19.7 32.8
Expenses 2.4 6.2 10.1 15.1 21.1
Net
Profit
($2.4) ($4.7) $0.05 $4.5 $11.6
?
18. WHAT DOES YOUR CURVE LOOK LIKE?
How deep?
How wide?
Timing?
Slope?
18
19. STEPS TO BUILD A PROFIT & LOSS STATEMENT
1. Build out Unit Economics
2. Build a timeline with assumptions
3. Use curves to build short-term model
(12, 18 or 24 months)
4. Predict Year 5 model
(within Zone of Reason)
5. Fill-in P&L and/or present graphs
Benchmark vs. Competition
Make sure everything passes
“common sense” test
.
21. UNIT ECONOMICS
Fundamental building block of
any financial model
What does it take to
build and sell one?
One product delivered
One software license
One job completed
One client serviced
25. PRIMARY BUSINESS MODELS
Product
Tangible Solution
Design once, sell many
Service
Custom Solution
Intangible Value
Trade
Connect Buyers and Sellers
Product
Service Trade
26. SECONDARY BUSINESS MODELS
Combining primary business modes in groups
Product Service Trade
Marketplace x x
Brokerage x x
Subscription x x
Ecosystem x x x
Product
Service Trade
27. REVENUE MODELS DRIVE UNIT ECONOMICS
Type Business Revenue Model Example
Primary
Product Sales One time sale Presentation Clicker
Service Sales Hourly Rate Consultant
Trade Resale Retail Sales
Derivative
Subscription Monthly Revenue Software as a Service
Marketplace Transaction Fees Ebay, Etsy
Brokerage Commission Fees Real Estate
Ecosystem Combination Apple
28. REVENUE MODELS DRIVE UNIT ECONOMICS
Type Business Revenue Model Example
Primary
Product Sales One time sale Presentation Clicker
Service Sales Hourly Rate Consultant
Trade Resell Retail Sales
Derivative
Subscription Monthly Revenue Software as a Service
Marketplace Transaction Fees Ebay, Etsy
Brokerage Commission Fees Real Estate
Ecosystem Combination Apple
33. Retail price: $35
Channel Margin: - $19
Wholesale price $16
You typically don’t control this…
Revenue that comes to the company
34. UNIT ECONOMICS
1. Unit Price $16
2. Each unit has a Cost
This is your variable cost
Also called COGS for Cost Of Goods Sold
35. UNIT COST
Subsystem Cost
Housing $1.50
Electronics + Laser $2.50
Battery $0.25
Packaging, manual $1.00
Wireless Module $1.75
Total Unit Cost $7.00
Draw a Circle around the Unit.
What does it directly cost to produce?
36. UNIT PROFIT
This is the profit you make per unit sold
Unit Price
minus Unit Cost
UNIT PROFIT
37. UNIT PROFIT
Profit made per unit sold:
Average Selling Price (ASP): $16.00
Average Unit Cost: - $7.00
Unit Profit: $9.00
39. UNIT PROFIT MARGIN %
Percent profit margin
= (Revenue – cost) / Revenue
= Profit / Revenue
= $9 / $16 = 56.25%
Is this good?
43.75%
56.25%
Revenue
Unit Costs
Unit Profits
40. REVENUE MODELS DRIVE UNIT ECONOMICS
Type Business Revenue Model Cost Model
Primary
Product Sales One time sale COGS
Service Sales Hourly Rate Hourly Cost
Trade Resell COGS
Derivative
Subscription Monthly Revenue CAC
Marketplace Transaction Fees open
Brokerage Commission Fees open
Ecosystem Combination open
41. Law Firm
Working for hourly
billings
Billing Rate
- Hourly Pay
Hourly Profit
SERVICE EXAMPLE
42. REVENUE MODELS DRIVE UNIT ECONOMICS
Type Business Revenue Model Example
Primary
Product Sales One time sale Presentation Clicker
Service Sales Hourly Rate Consultant
Trade Resell Retail Sales
Derivative
Subscription Monthly Revenue Software as a Service
Marketplace Transaction Fees Ebay, Etsy
Brokerage Commission Fees Real Estate
Ecosystem Combination Apple
45. TOTAL COSTS
Variable Costs
Fixed Costs
Variable costs vary with
the amount produced.
Fixed costs remain the
same, no matter how
much output a company
produces.
46. TOTAL COSTS
Variable Costs
Fixed Costs
Variable costs vary
with the amount
produced.
Fixed costs remain
the same, no matter
how much output a
company produces.
COGS
Expenses
47. FIXED COSTS
Business costs that are constant independent of units
produced
Generally includes:
Salaries
Rent, Insurance and Utilities
Marketing
All stay the same whether you sell one or 1M units
48. FIXED COSTS?
If you have employees, you have Salary costs
If you have a physical building, you pay
Rent, Insurance, Utilities
If you promote, Marketing and Sales are a primary
expense
* Exception to both would be large factories where Capital cost considerations
need to be added
49. SALARIES
How many people needed to run
your business?
Management
Engineers
Marketing, Sales, etc.
Factory workers are considered
Direct Labor, part of COGS
50. RENT
Price varies by use
Commercial or store fronts
Warehouse space
Offices:
Consider 20 sq meter per employee
51. MARKETING
Expenses relating to promotion and selling
Often significant for B2C and B2B2C
companies
Use 30% to 55% of revenues if you need to
build a brand
52. IS MARKETING VARIABLE OR FIXED?
… It depends
Yes:
If we can attribute marketing costs on a per-unit basis
Example is a coupon redeemed for a given unit
This is a Unit or Variable Cost.
No:
If we are running a general campaign and cannot attribute to specific
unit sales
These are Fixed Costs or Expenses
53. A UNIT COST EXAMPLE: COUPONS
We run a coupon campaign for $2 off
That specific coupon attributable to a clicker
sale
Coupon cost à sold a clicker
This is a Variable or Unit Cost
54. A FIXED COST EXAMPLE
General Advertising
We run radio ads, We attend trade shows
Increases sales but can’t attribute our expenses
to any specific unit sales.
This is a Fixed Cost or Expense
?
55. VARIABLE VS. FIXED COSTS
Variable Costs
Direct Materials
Direct Labor
CAC
Fixed Costs
Corporate Expenses
Rent
Salaries
Insurance
Training
Research
It Depends
Marketing Campaigns
Shipping, Delivery
Sales Commissions
Utilities
Scrap
Recalls
56. EXAMPLE: TOTAL FIXED COSTS
Add Salary, Marketing and Sales and other Fixed Expenses
Category Expense
Salaries $360K
Rent, etc $190K
Marketing $370K
Total $K $920K
57. ALLOCATING FIXED COSTS
For tech companies, normally summarized as:
M&S Marketing & Sales
R&D Research & Development
G&A General & Administrative
58. ZONES OF REASON
Once a company reaches “steady state”, you
can compare expenses vs. industry norms.
For tech companies, normally summarized as:
M&S Marketing & Sales
R&D Research & Development
G&A General & Administrative
Category Expense as %
of Revenue
Marketing & Sales 15% to 55%
R&D 10% to 30%
G&A 8% to 15%
59. EXAMPLE: SIMPLE ONE-PERIOD P&L
Assume we’ve sold 100K units…
Gross Revenue: $1,600K (same as $1,600,000)
COGS: - $700K
Gross Profit: $900K
Formatting Notes:
1. US uses period as a
decimal point
2. Larger numbers
always expressed as
$K ($1000) or
$M ($1000K)
60. UNITS SOLD à GROSS PROFIT
Units Sold (K) 100K
Average Selling Price (ASP) $16
Gross Revenue ($K) $1,600
Average Cost $7
COGS ($K) $700
Gross Profit ($K) $900
Step 1
61. GROSS PROFIT
% of revenue shown
for comparison vs.
industry standard
Results %
Revenues $1,600 100.00%
COGS $700 43.75%
Gross Profit $900 56.75%
62. ADD EXPENSES
By category
Expressed as a
positive number
Results %
Revenues $1,600 100.00%
COGS $700 43.75%
Gross Profit $900 56.75%
Marketing & Sales $480 30.00%
R&D $320 20.00%
G&A $120 7.50%
Total Expenses $920 57.5%
63. ONE PERIOD P&L
Our Clicker
Business…!!!
Here is everything lined up
for one period
Results %
Revenues $1,600 100.00%
COGS $700 43.75%
Gross Profit $900 56.75%
Marketing & Sales $480 30.00%
R&D $320 20.00%
G&A $120 7.50%
Total Expenses $920 57.5%
Net Profit ($20) -0.75%
64. ONE PERIOD P&L
Our Clicker
Business…!!!
Here is everything lined up
for one period
Are these good
results?
Results %
Revenues $1,600 100.00%
COGS $700 43.75%
Gross Profit $900 56.75%
Marketing & Sales $480 30.00%
R&D $320 20.00%
G&A $120 7.50%
Total Expenses $920 57.5%
Net Profit ($20) -0.75%
66. STEPS TO BUILD AN PROFIT & LOSS STATEMENT
1. Build out Unit Economics
2. Build a timeline with assumptions
3. Use curves to build short-term model
(12, 18 or 24 months)
4. Predict Year 5 model
(within Zone of Reason)
5. Fill-in P&L and/or present graphs
Benchmark vs. Competition
Make sure everything passes
“common sense” test
.
68. PRIMARY BUSINESS MODELS
Product
Tangible Solution
Design once, sell many
Service
Custom Solution
Intangible Value
Trade
Connect Buyers and Sellers
Product
Service Trade
69. REVENUE CURVES VARY BY BUSINESS MODEL TYPE
“Scalable”
Product
Service
with Overhead
Trade
1
2
3
4
5
6
7
1 2 3
4
5
6
7
1
2
3
4
5
6
7
70. REVENUE CURVES VARY AS A FUNCTION OF THE
BUSINESS
Sales Volume = Height
Time to Market = Length
Sales Growth = Slope
71. YOUR COSTS WILL VARY WITH TECHNOLOGY AND
ECONOMIES OF SCALE
Decreasing Costs Uncertain Costs Increasing Costs
Technology
Transportation
LaborRaw Materials
Regulations
72. YOUR COMPANY TIMELINE
Q3Q1 Q2 Q7Q6 Q8
Series B
Company
Starts
First
Production
Full
Production
Series A
Second
Production
Cost
Reduction
First
Orders
Seed Funding
Q4 Q5
Employees: 6 10 14 18 22 25 29 33
50K/month
Shipments
74. STEP 1: BUSINESS ASSUMPTIONS
Revenue Model: A product, one-time sale
Market Type: Re-segmented Market
Marketing Strategy: B2C
Sales Channel: Direct Sales over Web
Costs: First production: $10
First 2 years $2.50
Declining costs over time
75. STEP 1: OPERATIONS AND TIME ASSUMPTIONS
Production: Subcontract Manufacturing
no factory required
Time-to-Market:
Takes 3 months to develop first prototypes
Three months to sample customers
Three months to first production
76. STEP 2: UNIT ECONOMICS
Our unit is one spinner
Unit Price: $6.00
Unit Cost: $2.50
Unit Profit: $3.50
Unit Margin: 58.3%
77. NEWCO UNIT PROFIT OVER 2 YEARS
Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8
Units Sold (K) 0 1 5 20 50 80 120 160
ASP $0 $0 $3 $6 $6 $6 $6 $6
Total $K $0 $0 $15 $120 $300 $480 $720 $960
Unit Cost - $10 $10 $5.00 $2.50 $2.50 $2.50 $2.50
COGS $K 0 $10 $50 $100 $125 $200 $300 $400
Gross Profit 0 ($10) ($35) $20 $175 $280 $420 $560
In this case:
- Average Selling price starts at zero (product samples) and grows to steady state
- Units ship in Q2, pre-production until Q5
- Unit costs high for first batch, steady state for Q5 and beyond
78. ADD EXPENSES BY DEPARTMENT
Salaries and Fixed costs
Research & Development (R&D) Research, Engineering and Development
Sales & Marketing Promoting and selling product
Operations Making and distributing product
General & Administrative “Overhead” of corporate management,
finance, legal, rent, etc.
85. START TO BUILD 5 YEAR P&L
Why Five Years?
Shows Business Potential
Steady State growth rates, profitability
Ability to compare with industry averages
Fits within VC 10 year investment horizon
An educated guess
First Two Years Complete: Business under development
Think about Year 5
86
86. THINK ABOUT YEAR 5
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 %
Units Sold (K) 26 410 8200
ASP $5.95 $6 $6
Total $K $135 $2460 $49,200 100%
Unit Cost 6.15 $2.50 $2.00
COGS $K 160 1025 16400 33%
Gross Profit ($25) 1435 32800 67%
R&D 660 1375 3540 7%
S&M 820 2550 8360 17%
Ops 510 1215 3430 7%
G&A 410 1025 5800 12%
Expenses $2,400 $6,165 $21,130 43%
Net Profit ($2,425) ($4,730) $11,670 24%
87. THINK ABOUT YEAR 5
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 %
Units Sold (K) 26 410 8200
ASP $5.95 $6 $6
Total $K $135 2460 $49,200 100%
Unit Cost 6.15 $2.50 $2.00
COGS $K 160 1025 16400 33%
Gross Profit ($25) 1435 32800 67%
R&D 660 1375 3540 7%
S&M 820 2550 8360 17%
Ops 510 1215 3430 7%
G&A 410 1025 5800 12%
Expenses $2,400 $6,165 $21,130 43%
Net Profit ($2,425) ($4,730) $11,670 24%
Zone of
Reason
88. FILL IN THE GAPS
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 %
Units Sold (K) 26 410 2900 5250 8200
ASP $5.95 $6 $6 $6 $6
Total $K $135 2460 $17,400 $31,500 $49,200 100%
Unit Cost 6.15 $2.50 $2.50 $2.25 $2.00
COGS $K 160 1025 7250 11813 16400 33%
Gross Profit ($25) 1435 10150 19688 32800 67%
R&D 660 1375 1740 2630 3540 7%
S&M 820 2550 4420 6240 8360 17%
Ops 510 1215 1760 2430 3430 7%
G&A 410 1025 2175 3850 5800 12%
Expenses $2,400 $6,165 $10,095 $15,150 $21,130 43%
Net Profit ($2,425) ($4,730) $55 $4,538 $11,670 24%
89. IT’S A P&L…!
In $K Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 %
Revenue $135 2460 $17,400 $31,500 $49,200 100%
COGS 160 1025 7250 11813 16400 33%
Gross Profit ($25) 1435 10150 19688 32800 67%
R&D 660 1375 1740 2630 3540 7%
S&M 820 2550 4420 6240 8360 17%
Ops 510 1215 1760 2430 3430 7%
G&A 410 1025 2175 3850 5800 12%
Expenses $2,400 $6,165 $10,095 $15,150 $21,130 43%
Net Profit ($2,425) ($4,730) $55 $4,538 $11,670 24%
$50M Business
Losses for first two plus years
Break even year 3
Unit costs dropping
Steady State profitable
Expenses within “Zone of Reason”
Need to raise at least $7.2M
90. SIMPLIFIED FOR PRESENTATION
in $M Yr 1 Yr 2 Yr 3 Yr 4 Yr 5
Revenue $0.1 2.5 $17.4 $31.5 $49.2
COGS 0.2 1.0 7.2 11.8 16.4
Gross
Profit
(.02) 1.4 10.1 19.7 32.8
Expenses 2.4 6.2 10.1 15.1 21.1
Net
Profit
($2.4) ($4.7) $0.05 $4.5 $11.6
91. GRAPH IT..!
Income statements are the language
of most finance professionals
Graphic representations differ.
Simplest: Break out Revenues and
Net Profits
Keep as periodic information, not
cumulative.
Year 1 Year 2 Year 3 Year 4 Year 5
Revenue 0 135 2460 17400 31500 49200
Profits 0 -2425 -4730 55 4538 11670
-10000
0
10000
20000
30000
40000
50000
60000