Ebru Gürses Phone: +90 212 328 1939 Email: e.gurses@bicangels.com Startnowhow – Seminar 509.02.2016 20

1. FINANCIAL PLANNING FOR STARTUPS
Ebru Gürses / Dr. Joachim Behrendt

2. INTRODUCTION
StartNowHow
• Open seminar series for active and prospective entrepreneurs
• 10 sessions on monthly basis until summer 2016
• Covers relevant theoretical and practical aspects of entrepreneurship
• Based on lecture „entrepreneurship“ @Bogazici University
• Based on experiences of entrepreneurs, investors, mentors and consultants
• Each session with guest speaker (entrepreneurs, investors, mentors, etc.)
• Language: English / Turkish
• Thursdays 17.15h – 19.30h
• Next session: Thu 10. March 2016
• Topic: Digital Marketing Planning and Control
• Certificate provided for participants joining at least 70% of the sessions
• Early registration for each session required (eventbrite), limited capacity!
• Priority for regular participants
Startnowhow – Seminar 509.02.2016 2

3. INTRODUCTION
StartNowHow - Seminar Topics (preliminary)
1. Thu 1.10.15: The entrepreneurial ecosystem in Turkey
2. Thu 15.10.15. Entrepreneurship as a profession
3. Thu 12.11.15: Opportunity recognition and evaluation
4. Thu 10.12.15: Planning, developing and testing a business model
5. Thu 7.1.16: Market and competitor research
6. Thu 11.2.16: Financial planning for startups
7. Thu 10.3.16: Digital Marketing planning and control
8. Thu 14.4.16: Funding the startup – stage financing for ventures
9. Thu 12.5.16: The investment process – pitching, negotiations and termsheet
10. Thu 9.6.16: Success and failure as an entrepreneur
Startnowhow – Seminar 509.02.2016 3

4. FINANCIALPLANNING
Step 1: Revenues and Cost of Goods Sold Planning
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• Revenue Estimation
• Identify all sources of revenues
• Estimate future revenues after establishment per day (or month, depending on industry)
• Understand revenue drivers
• Number of customers
• Number of products / average ticket per customer
• Average Revenue per customer (net, after VAT)
• Cost of Goods Sold Estimation (Direct Cost)
• Calculation of direct cost of goods sold (Examples: buying price, direct production cost)
• Calculation of gross margin (revenues minus direct cost) per unit and product / service
• Aggregation for income statement calculation
• Calculation of monthly revenues / COGS / gross margin based on assumptions about
seasonality / sales growth over time / time until business is established
• Calculation of first three years on monthly (or quarterly) basis, years 4 + 5 on yearly basis
• Result: Revenues / COGS / Gross margin years 1- 5
• Consideration of risk for gross margin part of income statement
• Scenario analysis (e.g. Best / expected / worst case)
• Sensitivity analysis (for full, integrated set of financial statements)
• Simulation (possible with probabilities / Monte-Carlo-Simulation as well)

5. FINANCIALPLANNING
Revenues
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Source: Bygrave, W.D. / Zacharakis, A., The Portable MBA in Entrepreneurship, p.143

6. FINANCIALPLANNING
Cost of Goods Sold
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Source: Bygrave, W.D. / Zacharakis, A., The Portable MBA in Entrepreneurship, p.145

7. FINANCIALPLANNING
Step 2: Completion of Pro-Forma Income Statements
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• Other Operating Expenses (indirect production cost, marketing + sales, gen.admin.cost)
• Calculation of personnel cost
• Personnel planning for full five years (position x number of employees / position x
average salary incl. Employer part of social security contributions, other personnel-
dependent cost)
• Calculation of all other time-dependent operating expenses
• Calculation of start-up cost during setup period
• Calculation of depreciation / amortization based on investment plan / depreciation plan
• Calculation of cost on monthly basis for years 1-3, yearly basis years 4-5
• Other Operating Income
• Calculation of other operating income positions for 5-year period
• Gross margin – operating expenses + other operating income = EBIT
• EBITDA = EBIT + depreciation / amortization
• Calculation of financial result
• Consideration of interest expenses for long-term loans or other types of debt
• If applicable, calculation of other regular financial income / financial expenses
• EBIT +/- financial result = EBT (earnings before taxes)
• Calculation of taxes on income
• Normally in % of EBT, if applicable consideration of losses carried forward
• Net Profit / Loss = EBT ./. Taxes on income

8. FINANCIALPLANNING
Personnel Cost
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Source: Bygrave, W.D. / Zacharakis, A., The Portable MBA in Entrepreneurship, p.147

9. FINANCIALPLANNING
Operating Expenses
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Source: Bygrave, W.D. / Zacharakis, A., The Portable MBA in Entrepreneurship, p.146

10. FINANCIALPLANNING
Income Statement
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Source: Bygrave, W.D. / Zacharakis, A., The Portable MBA in Entrepreneurship, p.148

11. FINANCIALPLANNING
Step 3: Comparison
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• Recommended step, not always done: Comparision with „industry standards“
• Comparison of COGS %,
• Comparison of gross margins %
• Comparison of operating expenses %
• Comparison of operting results %
• Sources
• Published financial statements from public companies
• Associations
• Published statistical information
• Result: Confirmation / Modification of estimated income statements

12. FINANCIALPLANNING
Comparison
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Source: Bygrave, W.D. / Zacharakis, A., The Portable MBA in Entrepreneurship, p.151

13. FINANCIALPLANNING
Seasonality and Sales Growth
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Source: Bygrave, W.D. / Zacharakis, A., The Portable MBA in Entrepreneurship, p.155

14. FINANCIALPLANNING
Step 4: Determination of Operative Cash Flow
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• Indirect calculation of operative cash flow: Starting point net profit / loss of period
• + adding back: depreciation / amortization of that period
• +/- changes in working capital
• - increases in accounts receivables
• - increases in inventories
• + increases in accounts payables
• Alternative: direct calculation of operative cash flow
• Consideration of cash-effective revenues in month of cash effectiveness
• Example: 70% cash, 20% credit card = 1 month later, 10% per invoice with 5% payment
within one month, 5% payment within two months after purchase
• Consideration of cash-effective expenses in month of cash effectiveness
• Example: standard payment term for suppliers of 30 days = consideration of cash
outflow one month after purchase
• No consideration of non-cash-effective expenses, e.g. depreciation
• = Operative cash flow

15. FINANCIALPLANNING
Operative Cash Flow Months 1-6
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Source: Bygrave, W.D. / Zacharakis, A., The Portable MBA in Entrepreneurship, p.157

16. FINANCIALPLANNING
Step 5: Determination of Complete Cash Flow Statements
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• Calculation of investment plan
• Calculation of all investments in fixed assets for full five-year period (material,
immatierial, financial investments)
• If applicable, consideration of desinvestments
• All investments / desinvestments with full cash amounts
• Calculation of financing plan
• Consideration of long-term loans for financing the venture
• Consideration of interest expenses in income statement
• Consideration of principal repayments
• Consideration of equity measures (increases / decreases)
• Consideration of dividend payouts
• Cash Flow Statement Structure
• Cash at beginning of period
• +/- Operative cash flow
• +/- Cash flow from investment activities
• +/- Cash flow from financing activities
• = Cash at end of period
• Cumulative cash flow statement (for full five years) is used for iterative funds required
calculation / funds planning

17. FINANCIALPLANNING
Total Cash Flow / Funds Needed
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Source: Bygrave, W.D. / Zacharakis, A., The Portable MBA in Entrepreneurship, p.158

18. FINANCIALPLANNING
Step 6: Completion of Pro-Forma Financial Statements
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• Balance sheet at beginning of venture
• Normally only initial equity + cash
• Balance sheet at end of each period
• Consideration of income statement for period
• Consideration of changes in working capital (accounts receivables, inventories, accounts
payables) in balance sheet at end of period
• Consideration of investments and depreciation in balance sheet at end of period
• Consideration of loan repayments / additional loans in balance sheet at end of period
• Consideration of equity measures / dividend payouts in balance sheet at end of period
• Result: Full set of integrated pro-forma financial statements
• Balance sheets for t = 0 to t = 6
• Income statements for periods t0-1 to t4-5
• Cash flow statements for periods t0-1 to t4-5
• Investment plans for periods t0-1 to t4-5
• Financing plans for periods t0-1 to t4-5

19. OUTLOOK
StartNowHow - Outlook
• Today‘s materials will be made available to participants for downloading
• Next Seminar: „Digital Marketing planning and control ”
• Guest Speaker: Esra Günel, BIC Angels / Havas
• Thursday, 10.3.2016, 17.15 – 19.30h
• Don‘t forget to register early (eventbrite) - capacity 50 people!
• Priority for participants / registrants from today‘s session
• General rule: Allocation of seats according to participation
• Regular participation = certificate (70% participation)
Startnowhow – Seminar 509.02.2016 19

20. BIC ANGEL INVESTMENTS
Dr. Joachim Behrendt
Phone: +90 212 328 1939
Fax: +90 212 328 1933
www.bicangels.com
http:/twitter.com/joachimbehrendt
http://tr.linkedin.com/pub/joachim-behrendt/18/706/a7a
Email: j.behrendt@bicangels.com