My presentation last night at the Founder Institute Brussels on "Business models, Revenues, Costs & Profits", ie. on financial modeling for startups.
(cc) BY NC SA, Rodrigo SEPÚLVEDA SCHULZ
www.rodrigosepulveda.com
Business models and financial modeling for startups.
Class material for the Founder Institute.
(cc) BY NC SA, Rodrigo SEPULVEDA SCHULZ
www.rodrigosepulveda.com
Learning Objectives:
Determine the break-even point and output to achieve target operating income
Incorporate income tax considerations into CVP analysis
Determine and explain operating leverage
Draw the breakeven graph and the cost-volume-profit graph
Business models and financial modeling for startups.
Class material for the Founder Institute.
(cc) BY NC SA, Rodrigo SEPULVEDA SCHULZ
www.rodrigosepulveda.com
Learning Objectives:
Determine the break-even point and output to achieve target operating income
Incorporate income tax considerations into CVP analysis
Determine and explain operating leverage
Draw the breakeven graph and the cost-volume-profit graph
Break Even or Point ialah salah satu cara metode penetapan harga. Ini membantu perusahaan manufaktur untuk menentukan jumlah produksi sesuai dengan keuntungan yang diharapkan dan atau harga yang disesuaikan dengan permintaan.
Professor Simon Benninga - Husband, Father, Friend, Colleague, Respected Researcher and Professor, Finance Expert, Avid Modeler. Former ModelOff Judge Simon Benninga passed away in 2015, but we remember the incredibly strong education legacy he left behind. Credit to Tal Mofkadi, Terry Benninga and Simon's friends & family for this beautiful tribute.
v3 of my class notes for students on how to understand how much money to raise, how much equity to give away, how VC funds work, and how to mitigate risks.
(finally, Slideshare does not accept Keynote formats anymore. Converted to PDF before upload, hence the white stripes).
Break Even or Point ialah salah satu cara metode penetapan harga. Ini membantu perusahaan manufaktur untuk menentukan jumlah produksi sesuai dengan keuntungan yang diharapkan dan atau harga yang disesuaikan dengan permintaan.
Professor Simon Benninga - Husband, Father, Friend, Colleague, Respected Researcher and Professor, Finance Expert, Avid Modeler. Former ModelOff Judge Simon Benninga passed away in 2015, but we remember the incredibly strong education legacy he left behind. Credit to Tal Mofkadi, Terry Benninga and Simon's friends & family for this beautiful tribute.
v3 of my class notes for students on how to understand how much money to raise, how much equity to give away, how VC funds work, and how to mitigate risks.
(finally, Slideshare does not accept Keynote formats anymore. Converted to PDF before upload, hence the white stripes).
Cost-plus pricing: Simplistic strategy that guarantees that price is higher than the estimated average cost
Studies of pricing behavior suggest that many managers who use cost-plus pricing do not price optimally.
Definition of Markup: Markup = (Price – Cost)/Cost where Cost here is cost per unit
The short-run equilibrium in monopolistic competition is Identical to short-run equilibrium under monopoly
As entry and exit of firms from the product group shifts individual firms’ demand curves, long-run equilibrium occurs where profit is equal to zero.
Lecture at the Founder Institute, Paris, France
1 February 2011
http://founderinstitute.com
(cc) BY NC SA, Rodrigo SEPÚLVEDA SCHULZ
http://www.rodrigosepulveda.com
The world of search engine optimization (SEO) is buzzing with discussions after Google confirmed that around 2,500 leaked internal documents related to its Search feature are indeed authentic. The revelation has sparked significant concerns within the SEO community. The leaked documents were initially reported by SEO experts Rand Fishkin and Mike King, igniting widespread analysis and discourse. For More Info:- https://news.arihantwebtech.com/search-disrupted-googles-leaked-documents-rock-the-seo-world/
LA HUG - Video Testimonials with Chynna Morgan - June 2024Lital Barkan
Have you ever heard that user-generated content or video testimonials can take your brand to the next level? We will explore how you can effectively use video testimonials to leverage and boost your sales, content strategy, and increase your CRM data.🤯
We will dig deeper into:
1. How to capture video testimonials that convert from your audience 🎥
2. How to leverage your testimonials to boost your sales 💲
3. How you can capture more CRM data to understand your audience better through video testimonials. 📊
Tata Group Dials Taiwan for Its Chipmaking Ambition in Gujarat’s DholeraAvirahi City Dholera
The Tata Group, a titan of Indian industry, is making waves with its advanced talks with Taiwanese chipmakers Powerchip Semiconductor Manufacturing Corporation (PSMC) and UMC Group. The goal? Establishing a cutting-edge semiconductor fabrication unit (fab) in Dholera, Gujarat. This isn’t just any project; it’s a potential game changer for India’s chipmaking aspirations and a boon for investors seeking promising residential projects in dholera sir.
Visit : https://www.avirahi.com/blog/tata-group-dials-taiwan-for-its-chipmaking-ambition-in-gujarats-dholera/
Implicitly or explicitly all competing businesses employ a strategy to select a mix
of marketing resources. Formulating such competitive strategies fundamentally
involves recognizing relationships between elements of the marketing mix (e.g.,
price and product quality), as well as assessing competitive and market conditions
(i.e., industry structure in the language of economics).
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
What are the main advantages of using HR recruiter services.pdfHumanResourceDimensi1
HR recruiter services offer top talents to companies according to their specific needs. They handle all recruitment tasks from job posting to onboarding and help companies concentrate on their business growth. With their expertise and years of experience, they streamline the hiring process and save time and resources for the company.
Enterprise Excellence is Inclusive Excellence.pdfKaiNexus
Enterprise excellence and inclusive excellence are closely linked, and real-world challenges have shown that both are essential to the success of any organization. To achieve enterprise excellence, organizations must focus on improving their operations and processes while creating an inclusive environment that engages everyone. In this interactive session, the facilitator will highlight commonly established business practices and how they limit our ability to engage everyone every day. More importantly, though, participants will likely gain increased awareness of what we can do differently to maximize enterprise excellence through deliberate inclusion.
What is Enterprise Excellence?
Enterprise Excellence is a holistic approach that's aimed at achieving world-class performance across all aspects of the organization.
What might I learn?
A way to engage all in creating Inclusive Excellence. Lessons from the US military and their parallels to the story of Harry Potter. How belt systems and CI teams can destroy inclusive practices. How leadership language invites people to the party. There are three things leaders can do to engage everyone every day: maximizing psychological safety to create environments where folks learn, contribute, and challenge the status quo.
Who might benefit? Anyone and everyone leading folks from the shop floor to top floor.
Dr. William Harvey is a seasoned Operations Leader with extensive experience in chemical processing, manufacturing, and operations management. At Michelman, he currently oversees multiple sites, leading teams in strategic planning and coaching/practicing continuous improvement. William is set to start his eighth year of teaching at the University of Cincinnati where he teaches marketing, finance, and management. William holds various certifications in change management, quality, leadership, operational excellence, team building, and DiSC, among others.
Putting the SPARK into Virtual Training.pptxCynthia Clay
This 60-minute webinar, sponsored by Adobe, was delivered for the Training Mag Network. It explored the five elements of SPARK: Storytelling, Purpose, Action, Relationships, and Kudos. Knowing how to tell a well-structured story is key to building long-term memory. Stating a clear purpose that doesn't take away from the discovery learning process is critical. Ensuring that people move from theory to practical application is imperative. Creating strong social learning is the key to commitment and engagement. Validating and affirming participants' comments is the way to create a positive learning environment.
Cracking the Workplace Discipline Code Main.pptxWorkforce Group
Cultivating and maintaining discipline within teams is a critical differentiator for successful organisations.
Forward-thinking leaders and business managers understand the impact that discipline has on organisational success. A disciplined workforce operates with clarity, focus, and a shared understanding of expectations, ultimately driving better results, optimising productivity, and facilitating seamless collaboration.
Although discipline is not a one-size-fits-all approach, it can help create a work environment that encourages personal growth and accountability rather than solely relying on punitive measures.
In this deck, you will learn the significance of workplace discipline for organisational success. You’ll also learn
• Four (4) workplace discipline methods you should consider
• The best and most practical approach to implementing workplace discipline.
• Three (3) key tips to maintain a disciplined workplace.
Skye Residences | Extended Stay Residences Near Toronto Airportmarketingjdass
Experience unparalleled EXTENDED STAY and comfort at Skye Residences located just minutes from Toronto Airport. Discover sophisticated accommodations tailored for discerning travelers.
Website Link :
https://skyeresidences.com/
https://skyeresidences.com/about-us/
https://skyeresidences.com/gallery/
https://skyeresidences.com/rooms/
https://skyeresidences.com/near-by-attractions/
https://skyeresidences.com/commute/
https://skyeresidences.com/contact/
https://skyeresidences.com/queen-suite-with-sofa-bed/
https://skyeresidences.com/queen-suite-with-sofa-bed-and-balcony/
https://skyeresidences.com/queen-suite-with-sofa-bed-accessible/
https://skyeresidences.com/2-bedroom-deluxe-queen-suite-with-sofa-bed/
https://skyeresidences.com/2-bedroom-deluxe-king-queen-suite-with-sofa-bed/
https://skyeresidences.com/2-bedroom-deluxe-queen-suite-with-sofa-bed-accessible/
#Skye Residences Etobicoke, #Skye Residences Near Toronto Airport, #Skye Residences Toronto, #Skye Hotel Toronto, #Skye Hotel Near Toronto Airport, #Hotel Near Toronto Airport, #Near Toronto Airport Accommodation, #Suites Near Toronto Airport, #Etobicoke Suites Near Airport, #Hotel Near Toronto Pearson International Airport, #Toronto Airport Suite Rentals, #Pearson Airport Hotel Suites
VAT Registration Outlined In UAE: Benefits and Requirementsuae taxgpt
Vat Registration is a legal obligation for businesses meeting the threshold requirement, helping companies avoid fines and ramifications. Contact now!
https://viralsocialtrends.com/vat-registration-outlined-in-uae/
Memorandum Of Association Constitution of Company.pptseri bangash
www.seribangash.com
A Memorandum of Association (MOA) is a legal document that outlines the fundamental principles and objectives upon which a company operates. It serves as the company's charter or constitution and defines the scope of its activities. Here's a detailed note on the MOA:
Contents of Memorandum of Association:
Name Clause: This clause states the name of the company, which should end with words like "Limited" or "Ltd." for a public limited company and "Private Limited" or "Pvt. Ltd." for a private limited company.
https://seribangash.com/article-of-association-is-legal-doc-of-company/
Registered Office Clause: It specifies the location where the company's registered office is situated. This office is where all official communications and notices are sent.
Objective Clause: This clause delineates the main objectives for which the company is formed. It's important to define these objectives clearly, as the company cannot undertake activities beyond those mentioned in this clause.
www.seribangash.com
Liability Clause: It outlines the extent of liability of the company's members. In the case of companies limited by shares, the liability of members is limited to the amount unpaid on their shares. For companies limited by guarantee, members' liability is limited to the amount they undertake to contribute if the company is wound up.
https://seribangash.com/promotors-is-person-conceived-formation-company/
Capital Clause: This clause specifies the authorized capital of the company, i.e., the maximum amount of share capital the company is authorized to issue. It also mentions the division of this capital into shares and their respective nominal value.
Association Clause: It simply states that the subscribers wish to form a company and agree to become members of it, in accordance with the terms of the MOA.
Importance of Memorandum of Association:
Legal Requirement: The MOA is a legal requirement for the formation of a company. It must be filed with the Registrar of Companies during the incorporation process.
Constitutional Document: It serves as the company's constitutional document, defining its scope, powers, and limitations.
Protection of Members: It protects the interests of the company's members by clearly defining the objectives and limiting their liability.
External Communication: It provides clarity to external parties, such as investors, creditors, and regulatory authorities, regarding the company's objectives and powers.
https://seribangash.com/difference-public-and-private-company-law/
Binding Authority: The company and its members are bound by the provisions of the MOA. Any action taken beyond its scope may be considered ultra vires (beyond the powers) of the company and therefore void.
Amendment of MOA:
While the MOA lays down the company's fundamental principles, it is not entirely immutable. It can be amended, but only under specific circumstances and in compliance with legal procedures. Amendments typically require shareholder
Memorandum Of Association Constitution of Company.ppt
Financial modeling for startups
1. “Revenues, Costs and Profits”
Business models, PnLs - for startups
http://www.flickr.com/photos/kidswithcourage/4588175282/sizes/o/
(cc) BY NC SA, Rodrigo SEPÚLVEDA SCHULZ - www.rodrigosepulveda.com - November 2011
2.
3. “how do you plan to make money?”
“how do you build a financial model ?”
“what are the types of expenses, such as fixed expenses, and costs of
good sold, and how to they scale ?”
“How do you know if your model is right ?
What do angel investors and venture capitalists
expect from your financial model?
How do you identify the key metrics
for your success ?
21. shift the ‘demand curve’ - hard, requires a unique
value proposition sustained by heavy marketing
P
10€
5€
2€
Q
100 200 500
22. shift the ‘demand curve’ - hard, requires a unique
value proposition sustained by heavy marketing
P
10€
5€
2€
Q
100 200 500
23. shift the ‘demand curve’ - hard, requires a unique
value proposition sustained by heavy marketing
P
R = 10€ x 500 = 5.000€
10€
(5x)
5€
2€
Q
100 200 500
26. Variable Costs : anything that can be directly
correlated with ONE unit sold of product/service
• COGS : Cost of Good Sold = Cost of Revenue
• usually the cost of raw materials necessary to produce a new
product,
or the cost of original item if re-selling
• add to that anything that can be linked directly:
• commission on each sale; % fee on bank; average shipping &
handling cost (if not added)...
• remember to think in AVERAGE terms
27. Fixed Costs (standardized) -
main goal is to make them variable
• Sales & marketing (S&M)
• Product / R&D / Technology
• HR : can be factored almost into Product,
S&M, G&A
• General & Administration (G&A) : rent,
lawyers, travel & expenses...
28. Margin = Revenue - Costs
•M=R-C
• M = ( average Price x Q ) - ( fixed costs + variable cost x Q)
• M = (average price - variable cost) x Q - fixed costs
• M = (Unit margin) x Q - FC
29. focusing on unit margin gives you great insights
• M = (Unit margin) x Q - FC means
• M > 0 only if
• unit margin is > 0
• (Unit margin x Q) > fixed costs
30. focusing on unit margin gives you great insights
• M = (Unit margin) x Q - FC means
• M > 0 only if
• unit margin is > 0
• (Unit margin x Q) > fixed costs
can you keep
your fixed
costs low ?
31. focusing on unit margin gives you great insights
• M = (Unit margin) x Q - FC means
• M > 0 only if
• unit margin is > 0
• (Unit margin x Q) > fixed costs
are you a can you keep
price based your fixed
business ? costs low ?
32. focusing on unit margin gives you great insights
• M = (Unit margin) x Q - FC means
• M > 0 only if
• unit margin is > 0
• (Unit margin x Q) > fixed costs
are you a are you a can you keep
price based volume based your fixed
business ? business ? costs low ?
41. Sales: remember to focus on UNITS
• let’s be competitive, and check prices
from competition (sales-minus
approach, vs. cost-plus approach).
• Let’s build a business plan on a
14,99€ average price point
for T-shirts
• We can expand into segmentation of
products, of prices, etc. later.
42. Sales : let’s assume I sell a few first per day, then
start increasing sales
• Assumptions :
• 4 T-shirts sold per day
• biz open online 24/7 = 30 days /month => 120 T-shirts/month
• 5% growth / month, but decreasing slowly to adjust for linear growth
• average price: 14,99€ (incl. VAT !)
(19.6% in France means 12,53€ excl. VAT) -
checked with market price/competition
43. let’s first model Revenue - you can play with variables later:
such as discounts, promotions, and fluctuating demand per season
44. 2. COGS (direct costs)
• let’s assume a white T-shirt bought online from a supplier
• look for economies of scale
• don’t forget S&H (incl. here)
• your business plan
should be VAT-free.
Don’t add it, only for
Cash-Flow statements
• Make sure you order with
enough lead-time (1 month?)
45. let’s now model direct costs - you can play with variables later :
white T-shirts + stickers + shipping
Gross margin has
to quickly
become >0,
>50% is best
46. 3. Indirect costs
• assumptions (t0 = launch of site, add as much HR+G&A for research before)
• sales & marketing : only Google Adwords SEM (assuming cost based on
conversion rates) + a launch budget for display (3 months).
• technology : using a hosted solution to start with :12€/month
http://commander.1and1.fr/xml/order/Eshops
• HR : based on number of people to prepare and ship T-shirts + founder
(finance, marketing, etc.) - everything else outsourced (incl. as costs)
• G&A : rent, insurance, pro services, etc. assuming a fixed cost :
rent as soon as a hire (300€/person), accountants, phone bills, etc.
47. last, let’s model indirect costs - you can play with variables later :
Sales & marketing, technology, HR, G&A
48. Now that your model is built : check for errors
use ‘track depencies’ to check formulas
I always use YELLOW for variables -
check them for likeliness
often use italic to indicate
a result of a formula
graphing an excel row (variable or result)
makes it easier to check validity
checking per period (quarter, year)
is useful + % sales
ps: beware of the last column of a model (doesn’t take into account the next period)
49. good practices
• Put the hypothesis on each month (eg. growth) : it’s then very easy to adjust
for seasonal fluctuation, or acceleration of growth rate
• Always good to put reality checks in the excel sheet. you can always hide
them later. I put them in italic.
• always good to number each sections item, makes it very readable
• make sure you document every important cell or formula
• it’s best to put assumptions in a separate sheet afterwards.
54. Changing variables allows to tweak & adjust
business model
Just changing price from 14,99€ to
18,99€ brings profitability at ~month 24
(1 year ahead). Volume to be adjusted.
will the offer be competitive and
attractive?
Changing sales volume from 4/day to
10/day brings profitability at ~month 23
(1 year ahead). Price to be adjusted +
marketing expenditure.
Can you validate conversion rates
early enough, hence marketing
expenses and traction of offer ?
55. Summary 1 : building a business model
• Build a model of your business : the algorithm first, with all relevant variables
• Make your spreadsheet easily readable, commented, well formatted : you’ll
use it to fine-tune your business, and to share with investors later on
• Don’t forget to double-check in all possible ways for errors
• Then, check that your variables are in a realistic range
• Finally, and only then, start testing different scenarios by just changing one
or two variables.
56. Summary 2: key insights
• Breakdown in 100% of revenue of ONE unit of sales
• When are you profitable ? (in months?)
• How many units do you need to sell to be profitable ?
• Elasticity of variables (impact of each on target objective;
examples = profitability, market share, revenue milestone, etc.)
• In upcoming class on fundraising :
helps assess how much money you need to raise