This document emphasizes the importance of financial planning for startups, covering key aspects such as understanding market potential, estimating costs, and identifying necessary resources. It outlines various components of a financial plan, including cost models, revenue streams, and the cost of goods sold. Additionally, it stresses the need for reasonable sales projections and the evaluation of profitability as the business matures.

1. Basics Financial Planning in a
Startup
Dr. Alok Nikhil Jha www.linkedin.com/in/aloknikhil

2. Why Create a Financial Plan?
•Why Create a Plan?
•What are various plans we create in
general?
•What is to be kept in mind while creating a
plan?

3. Why Create a Financial Plan?
• Know what you need
• Know why you need
• Know how much you need
• Know how you grow
• Know how you earn and spend

4. Financial Plan in a Pitch
• Does a company have a good understanding of its potential
market?
• Does the company have a sense of how much of that market
is obtainable?
• Are potential sales reasonable?
• Are sales prices reasonable? Is there an evidence to back it?
• Are projected costs complete and reasonable?
• How much money will be required to start the business?
• How much money will be required for self-sustainability?
• How profitable could the company be at maturity?

5. Key Building Blocks
KEY RESOURCES COST REVENUE

6. Resources
• What resources we need
• What do our value proposition requires to happen?
• How do we support our channels?
• How to support revenue channels?
• How to reach out to customers?
ALL THE RESOURCES THAT WE REQUIRE

7. Resources Types
Physical – Building,
office, Computer, Phone,
Equipments
Intellectual – Patents,
databases, process
knowledge
Human – Manpowe,
R&D, Development,
Sales, Advisors, Mentors
Financial – Funds

8. Resources Estimation
MONTH 0 MONTH N
Office
Device
Raw Material
Etc

9. Key Resources
What key
resources are
required?
How much it
will cost?
What are
hidden
resources?

10. Cost Model
• What will be your cost when you are up
and running?
• How will those cost change as you grow?
• What risks are inherent in your cost
assumptions?

11. Cost Types Fixed Costs
Variable Costs
Capital Costs or Capex
Operational Costs or Opex

12. Fixed
Costs
Management expenses
Infrastructure
Machinery
Capital assets
Licenses and compliance
costs

13. Variable
Costs
Labor /Staff Salary
Utilities
Raw material
Shipping

14. Economies of Scale
• Buy in Bulk
• Shipping in larger volume
• More efficient use of machinery

15. Economies of Scope
• One store delivering multiple products
• Multiple value proposition for a customer
• Multiple revenue streams (Extended warranty + product)

16. COGS
• Cost of goods Sold is a direct cost associated in providing a product or
service
• Labor
• Raw material / BoM
• Warehousing
• Revenue – COGS = PROFIT

17. SG&A
• Selling General and Administrative Expenses (SG&A) are indirect costs
associated with operating a business
• Examples
• Advertising
• Sales commissions
• Management Salaries
• Rent, travel etc.
REVENUE – COGS = Gross Profit
Gross Profit – SG&A = Operating Profit

18. Non Operating
• Non operating expenses are business costs that do not impact regular
operations Example
• Interest
• Income Tax
• Asset sales, Forex Gain/loss
Revenue – COGS = Gross Profit
Gross Profit – SG&A = Operating Profit
Operating Profit – Non Operating Expense = Net Income

19. Revenue Model
Month 0 Month N
Units Zero Reasonable
number
Price/Unit N/A or X Validated price
Margin Actuals
Revenue Units*price

20. Revenue Model
• Experiment with reasonable growth rates
• Estimate number of months
• Identify product based on location, share etc

21. What are your expenditures on Daily Basis?
What are your expenditure on Annually Basis?
Are you making Profit?

23. Thank You
For Any Support and Inputs and association you
may connect online
http://linkedin.com/in/aloknikhil or
http://tiny.cc/yesanj