Business Plan Online Sales by ayv44511

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									Building Sound Financial Models
           Adam B. Harris
               Principal
      Calacles Consulting Group
          www.calacles.com
Narrate


Ask yourself, what story does the business
plan need to tell?
Translation


A good financial model is simply a translation
of business plan wording into numbers.
Goal


Build a financial model with variables and links
between variables, creating the ability to
easily manipulate both variables and links to
tell your business story.
Benefits
Flexibility in allowing for month to month
operational changes

Clarity in showing client return on investment
calculations.

Agility in building visualizations for pitches
Build




        Putting it all together.
Deduction
Induction
Variables vs. Assumptions

                X         Assumption
     Online Ads will drive my business revenues to 10M by year 5


                            Variable
“Click-Through-Rates” for online ads are .05%, therefore my site, which
    receives 100,000 page visits, can convert roughly 50 potential sales
                         leads per ad campaign.
Outline
• list the key driving variable of your business
                  -- group into categories
      Marketing Plan                    Product(s) / Service(s)
      •Online Ads                       •Cost of Goods
      •Guerilla Marketing               •Manufacturing
      •Sales Calls                      •Development
      •Super Bowl Ad                    •Milestones



                    Revenue per Sales
                    •Forecast & Projections
                    •Conversion Statistics
                    •Marketing Plan
                    •Misc.
Outline
• list how each variable fits together
        – begin to develop links between key factors


           Ex:
Control
Build using control inputs to drive the variables,
this will allow for easy manipulation making the
model useful for monthly management of the
business
                                           REVENUES CONTROLS
                                         ACME INC. MARKETING BUDGET
                              2008            2009            2010          2011             2012
  TOOL                    $      10,000 $          35,000 $      50,000 $       75,000   $       125,000
  PR NETWORK              $     200,000   $       400,000 $     800,000 $    1,500,000   $     2,500,000
  AD BLOCK $s             $          -    $           -   $         -   $          -     $           -
                                    PR NETWORK: CLIENT CAMPAIGN BUDGETS
  Client Network Spend:       2008            2009            2010          2011             2012
  LRG CLIENTS - AVG       $      15,000 $          30,000 $      60,000 $      120,000   $       200,000
  MID CLIENTS - AVG       $      10,000 $          20,000 $      40,000 $       80,000   $       150,000
  SML CLIENTS - AVG       $        5,000 $         10,000 $      20,000 $       30,000   $        50,000



                                      B2B SERVICE : CLIENT TYPE CONV
                              2008           2009            2010           2011             2012
  LRG                          2%             4%              6%             8%              10%
  MID                          4%             6%              8%            10%              12%
  SML                         10%            15%              20%           25%              30%
                                      B2B SERVICE: MARKETING $s CONV
                              2008           2009            2010           2011             2012
  LRG                         10%            15%             25%            25%              25%
  MID                         20%            26%             31%            32%              32%
  SML                         25%            30%             44%            42%              41%
Key Components of a Financial Model
• The Core Five
  – Revenues: the channels from which your business generates revenue and
    how much from each stream
     • Sales & Marketing Plan

  – Cost of Goods (COGS): the cost of selling your product or service

  – Operational Expenditures (OPEX): how much your business spends in order
    to properly operate

  – Income Statement: how much net profits or losses your business will incur
    during a period of time

  – Cash Flow: how much cash your business generates and uses during a
    given time period
Other Components of a Financial Model
• In a Later Phase
    – Capital Expenditures (CAPEX): money spent acquiring or
      upgrading physical assets i.e. Property

    – Balance Sheet: summary of a company’s assets,
      liabilities and share holders equity at a given time
      period

    – Working Capital: how well a company manages its
      current assets vs. current liabilities

Note: These are all important components however each are late stage accounting statements -- mostly
required by investors when raising capital or for monitoring purposes after raising a venture round
Case Study
• PalmerRogovHarris Laboratories



          Concept vs. Company
           Adam B. Harris | Principal
Calacles Consulting Group | www.calacles.com
   E: aharris@calacles.com P: 510.821.4499

								
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