The document provides projected financial statements for ABC Company from 2010 to 2013. It shows increasing revenue over the years as the company grows. While losses are projected for 2010-2012 as operations expand, profits are estimated for 2013 as the company reaches scale. The document also notes increasing headcount and capital expenditures to support the company's growth trajectory over this period.

1. March 21, 2014
1
Financial Projections for Investor
Presentations
David Fogel
Managing Director, Swifton CFOs LLC
dfogel@swiftoncfos.com
www.swiftoncfos.com
ABC Company, Inc.
Estimated Statement of Operations
For The Years Ended December 31, 2010. 2011, 2012, and 2013
2010 2011 2012 2013 2010 2011 2012 2013
Re venue:
Installation Revenue 450$ 3,825$ 21,038$ 73,633$ 77.1% 84.3% 82.3% 80.6%
Non-Installation Revenue
Service Fees 89$ 623$ 4,361$ 17,444$ 15.2% 13.7% 17.1% 19.1%
Other Non-Installation Revenue 45$ 90$ 158$ 237$ 7.7% 2.0% 0.6% 0.3%
Total Revenue: 584$ 4,538$ 25,557$ 91,314$ 100.0% 100.0% 100.0% 100.0%
Direct Costs:
Installation Costs 338$ 2,678$ 12,623$ 36,817$ 57.9% 59.0% 49.4% 40.3%
Non-Installation Costs 38$ 193$ 1,175$ 4,420$ 6.5% 4.3% 4.6% 4.8%
Direct Costs: 376$ 2,871$ 13,798$ 41,237$ 64.4% 63.3% 54.0% 45.2%
Other Cost of Services 88$ 567$ 2,556$ 6,849$ 15.1% 12.5% 10.0% 7.5%
Gross Margin ($) 120$ 1,100$ 9,203$ 43,228$ 20.5% 24.2% 36.0% 47.3%
Gross Margin (%) 20.5% 24.2% 36.0% 47.3%
Operating Expe nse s:
Sales 292$ 1,588$ 6,389$ 18,263$ 50.0% 35.0% 25.0% 20.0%
Marketing 263$ 1,361$ 5,111$ 13,697$ 45.0% 30.0% 20.0% 15.0%
Research & Development 175$ 998$ 2,811$ 8,218$ 30.0% 22.0% 11.0% 9.0%
General & Administration 44$ 295$ 1,533$ 4,566$ 7.5% 6.5% 6.0% 5.0%
Total Operating Expenses: 774$ 4,242$ 15,844$ 44,744$ 132.5% 93.5% 62.0% 49.0%
EBITDA (654)$ (3,142)$ (6,641)$ (1,516)$ -112.0% -69.2% -26.0% -1.7%
Other (Revenue) & Expenses:
Interest 80$ 156$ 32$ 80$ 13.7% 3.4% 0.1% 0.1%
Taxes 8$ 9$ 11$ 15$ 1.4% 0.2% 0.0% 0.0%
Depreciation & Amortization 13$ 67$ 268$ 874$ 2.2% 1.5% 1.0% 1.0%
Total Other (Revenue) & Expenses 101$ 232$ 311$ 969$ 17.3% 5.1% 1.2% 1.1%
Ne t Income (Loss) (755)$ (3,374)$ (6,952)$ (2,485)$ -129.3% -74.3% -27.2% -2.7%
Statement Notes:
Re venue
Market 1 43$ 2,320$ 12,205$ 46,232$ 7.4% 51.1% 47.8% 50.6%
Market 2 230$ 1,201$ 7,652$ 26,450$ 39.4% 26.5% 29.9% 29.0%
Market 3 256$ 932$ 3,250$ 12,658$ 43.8% 20.5% 12.7% 13.9%
Market 4 55$ 85$ 2,450$ 5,974$ 9.4% 1.9% 9.6% 6.5%
Total Reve nue 584$ 4,538$ 25,557$ 91,314$
Headcount
Existing 13.00$ 18.00$ 61.00$ 298.00$
New Hires 5.00$ 43.00$ 237.00$ 830.00$
Total Headcount 18.00$ 61.00$ 298.00$ 1,128.00$
Capital Expenditures 126.00$ 424.00$ 1,584.00$ 4,474.00$
Dollars (000's omitte d) Percent (%) of Revenue
COPYRIGHT © 2010
COPYRIGHT © 2014

2. March 21, 2014
2
Rule #1:
If you cannot read the
financial statement from two
feet away the font is
too small
(too many details)
COPYRIGHT © 2014
ABC Company, Inc.
Projected Statement of Operations
For The Years Ended December 31, 2010. 2011, 2012, and 2013
2010 2011 2012 2013
Revenue:
Market 1 43.00$ 2,320.00$ 12,205.00$ 46,232.00$
Market 2 230.00$ 1,201.00$ 7,652.00$ 26,450.00$
Market 3 256.00$ 932.00$ 3,250.00$ 12,658.00$
Market 4 55.00$ 85.00$ 2,450.00$ 5,974.00$
Total Revenue 584.00$ 4,538.00$ 25,557.00$ 91,314.00$
Gross Margin ($) 120.00$ 1,100.00$ 9,203.00$ 43,228.00$
Gross Margin (%) 20.5% 24.2% 36.0% 47.3%
Operating Expenses:
Sales & Marketing 555.00$ 2,949.00$ 11,500.00$ 31,960.00$
Research & Development 175.00$ 998.00$ 2,811.00$ 8,218.00$
General & Administration 44.00$ 295.00$ 1,533.00$ 4,566.00$
Total Operating Expenses: 774.00$ 4,242.00$ 15,844.00$ 44,744.00$
Other Expense/(Income) 101.00$ 232.00$ 311.00$ 969.00$
Net Income (Loss) (755.00)$ (3,374.00)$ (6,952.00)$ (2,485.00)$
Statement Notes:
Headcount
Existing 13.00$ 18.00$ 61.00$ 298.00$
New Hires 5.00$ 43.00$ 237.00$ 830.00$
Total Headcount 18.00$ 61.00$ 298.00$ 1,128.00$
Capital Expenditures 126.00$ 424.00$ 1,584.00$ 4,474.00$
Dollars (000's omitted)
COPYRIGHT © 2014

3. March 21, 2014
3
Rule #2:
Pennies are only for
accounting auditors
COPYRIGHT © 2014
ABC Company, Inc.
Estimated Statement of Operations
For The Years Ended December 31, 2010. 2011, 2012, and 2013
2010 2011 2012 2013
Revenue:
Market 1 43$ 2,320$ 12,205$ 46,232$
Market 2 230$ 1,201$ 7,652$ 26,450$
Market 3 256$ 932$ 3,250$ 12,658$
Market 4 55$ 85$ 2,450$ 5,974$
Total Revenue 584$ 4,538$ 25,557$ 91,314$
Gross Margin ($) 120$ 1,100$ 9,203$ 43,228$
Gross Margin (%) 20.5% 24.2% 36.0% 47.3%
Operating Expenses:
Sales & Marketing 555$ 2,949$ 11,500$ 31,960$
Research & Development 175$ 998$ 2,811$ 8,218$
General & Administration 44$ 295$ 1,533$ 4,566$
Total Operating Expenses: 774$ 4,242$ 15,844$ 44,744$
Other Expense/(Income) 101$ 232$ 311$ 969$
Net Income (Loss) (755)$ (3,374)$ (6,952)$ (2,485)$
Statement Notes:
Headcount
Existing 13$ 18$ 61$ 298$
New Hires 5$ 43$ 237$ 830$
Total Headcount 18$ 61$ 298$ 1,128$
Capital Expenditures 126$ 424$ 1,584$ 4,474$
Dollars (000's omitted)
COPYRIGHT © 2014

4. March 21, 2014
4
Rule #3:
Use $ (dollar signs) on the
first and last row only.
Unless, of course, you are
mixing rows of $ and %, etc.
COPYRIGHT © 2014
FORMAT CREDIBILITY
The presentation format does
not interfere with (or create
noise for) the reader
COPYRIGHT © 2014

5. March 21, 2014
5
ABC Company, Inc.
Projected Statement of Operations
For The Years Ended December 31, 2010 through 2013
Revenue:
Market 1 43$ 2,320$ 12,205$ 46,232$
Market 2 230 1201 7652 26450
Market 3 256 932 3250 12658
Market 4 55 85 2450 5974
Total Revenue 584 4538 25557 91314
Gross Margin ($) 120 1100 9203 43228
Gross Margin (%) 20.5% 24.2% 36.0% 47.3%
Operating Expenses:
Sales & Marketing 555 2949 11500 31960
Research & Development 175 998 2811 8218
General & Administration 44 295 1533 4566
Total Operating Expenses: 774 4242 15844 44744
Other Expense/(Income) 101 232 311 969
Net Income (Loss) (755)$ (3,374)$ (6,952)$ (2,485)$
Statement Notes:
Headcount
Existing 13 18 61 298
New Hires 5 43 237 830
Total Headcount 18 61 298 1,128
Capital Expenditures 126$ 424$ 1,584$ 4,474$
Dollars
COPYRIGHT © 2014
Rule #4:
Use column headings that
make sense
COPYRIGHT © 2014

6. March 21, 2014
6
Rule #5:
Numbers with thousands or
millions must have commas
This: 54,556
Not this: 54556
COPYRIGHT © 2014
Rule #6:
Don’t mix fonts
Or font size……
And do not use a silly font
COPYRIGHT © 2014

7. March 21, 2014
7
Rule #7
Spelle Check
COPYRIGHT © 2014
And do not tell me you relied
on Microsoft…….
Rule #8:
Text is left justified
Numbers are right justified
Violators confuse the reader
COPYRIGHT © 2014

8. March 21, 2014
8
Rule #9:
Do not overdo color
and
Do not highlight in
COPYRIGHT © 2014
Use Spot color!
Rule #11:
Round your numbers to the
nearest thousand for
presentations
COPYRIGHT © 2014

9. March 21, 2014
9
Financials in your Slide deck
are a Marketing Effort!
Really?
COPYRIGHT © 2014
ABC Co.
($ 000's omitted)
2010 2011 2012 2013 2014
Pro Forma Financial Statement
Revenue -$ 1,875$ 44,953$ 108,238$ 180,161$
Cost of Service - 1,162 12,739 5,369 -
Gross Margin - 712 32,214 102,868 180,161
38% 72% 95% 100%
Operating Expenses
Employee Costs 1,303 2,972 3,587 4,198 4,379
Professional Fees 253 637 1,780 1,230 1,135
Marketing & Travel 61 525 2,340 293 658
Administrative Expenses 60 55 232 41 47
Development & Pilot Manufacturing 409 819 262 965 1,733
Facility & Other 195 801 1,206 1,612 2,023
Total Expenses 2,282 5,807 9,407 8,340 9,976
Depreciation & Amortization 42 98 301 590 791
EBIT (2,324) (5,193) 22,507 93,939 169,394
Net Income (2,639) (5,411) 16,893 55,530 100,603
0% -289% 38% 51% 56%
Pro Forma Cash Flow
Cash from Operations (2,597) (5,313) 17,193 56,120 101,393
Cash from Working Capital (31) (936) (2,879) (2,754) (3,437)
Cash from Investments (57) (297) (1,052) (607) (600)
Cash from Financing 7,000 - 42,000 - -
Net Cash Flow 4,315 (6,545) 55,262 52,759 97,357
Ending Cash 6,644$ 99$ 55,360$ 108,119$ 205,476$
Income
Statement
Cash Flow
Statement
COPYRIGHT © 2014

10. March 21, 2014
10
ABC Company – Financials by Year
($000’s omitted)
COPYRIGHT © 2014
($25,000)
$25,000
$75,000
$125,000
$175,000
$225,000
2010 2011 2012 2013 2014
Revenue
Income
Cash
Milestone #1
Prototype
Milestone #2
Pilots
Milestone #3
Commercialization
Seeking $250k Investment
Provide cost-effective outsourced CFO support
Clients range from pre-revenue startups to later stage
privately held companies
Goals
(1) educate entrepreneurs to understand and
consider financial opportunities and implications
(2) handle all accounting/ financial matters so the
entrepreneurs can focus on driving the business
COPYRIGHT © 2014

11. March 21, 2014
11
David A. Fogel, CPA
Serial entrepreneurial CFO
Managing Director of Swifton CFOs LLC (since 2009)
Experience with high tech companies ranging from biotech to
telecom to healthcare IT to social media to…
Adjunct Instructor of Master’s Program:
Presenter & Mentor:
Member:
COPYRIGHT © 2014
Introducing the Financial Statements
• Balance Sheet
• Profit and Loss Statement
• Cash Flow Statement
COPYRIGHT © 2014

12. March 21, 2014
12
Balance Sheet
What you own/owe – point in time
Assets = Liabilities + Equity
Assets are good?
Capital expenditures (Fixed Asset) rule
Amount => $5,000 AND useful life > one year
Liabilities – Disclose, disclose, disclose
COPYRIGHT © 2014
Profit and Loss Statement
(Statement of Operations)
• What you earned
• Could represent cash activities but usually much
more……
• Management accounting can be more
informative, but need to have GAAP
• Earnings can be managed, but cash is a reality…
COPYRIGHT © 2014

13. March 21, 2014
13
Cash Flow Statement
• Where your cash came and went:
• Operations, Investing, or Financing
• Cash in the bank is a fact
• Investors are most interested in your use of $$
COPYRIGHT © 2014
Developing The Financial Forecast
1. Defined
2. What about the assumptions?
3. Creating the sales forecast
4. Spreading the numbers
5. Creating the statements
COPYRIGHT © 2014

14. March 21, 2014
14
Ty Danco
Member, Mass Medical Angels
Member, North Country Angels
"I'll never believe your revenue numbers
anyway, but I sure want to scrutinize your
assumptions and expenses!"
COPYRIGHT © 2014
Developing The Financial Forecast
1.What are financial projections?
Collection of statements that present
your business in numbers (IS, BS, CF, Cap)
“Does the story make sense?”
“Does the story add up?”
COPYRIGHT © 2014

15. March 21, 2014
15
Set your goals from top down
but…..
Prepare the model from the bottom up
then….start over
with your top down goals
COPYRIGHT © 2014
Developing The Financial Forecast
2. What about the assumptions?
Document the source of each number you produce - Why?
- Knowledge of the assumptions proves that the
entrepreneur understands the business
- Prove it to yourself
Sources of assumptions
- Desired goal to be obtained
- Primary market research – surveys, vendor quotes
- Second market research – purchased or gov’t information
- Estimated or best guess (really try not to SWAG)
COPYRIGHT © 2014

16. March 21, 2014
16
Developing The Financial Forecast
2. What about the assumptions? (part 2)
Start-up costs (uses of $)
Financing (sources of $)
Capital expenditures (costs with >1 yr life)
Fixed expense (cost of being in business)
Variable expense (cost of doing business)
Projected sales (anticipated revenue earned)
Cash flow (anticipated $ received and spent)
COPYRIGHT © 2014
• Expenses up to the point when you are open
for business…….which is when?
• List uses of money – describe how spent
• Like: Fixed assets & Working Capital
• Examples?
Fixed Assets = Equipment, Furniture
Working Capital = Rental deposits, Insurance
Start-up cost assumptions
COPYRIGHT © 2014

17. March 21, 2014
17
• Sources where $ will come from
• Where?
Entrepreneur and team
F&F
Bank loan (though not likely for start-ups)
Debt from owner or outside creditor
Non-dilutive financing (maybe )
Equity capital
• For loan – know amount, terms of repayment
(mos), and rate of interest or return
Financing assumptions
COPYRIGHT © 2014
• Costs that have a “lifetime” greater than one year
AND an individual or collective cost greater than $2k
• Predict some fixed assets by headcount, some by
significant changes in sales volume, some by
changes in product lines, etc.
• Examples: Leasehold improvements, Furniture &
fixtures, Machinery
• Note: Expense the PCs & Macs & iPads
(but keep track of them anyway)
Capital Expenditures
(aka Fixed Assets)
COPYRIGHT © 2014

18. March 21, 2014
18
• Costs of being in business
• Do not vary by sales volume (i.e. day-to-day)
• But DO increase as the business scales
• Create fixed cost projections on monthly basis
• Research through correspondence with outside
vendors
• Record the source & amount from each
vendor……..
• Examples: Rent, Utilities, Salaries, Benefits,
Marketing expenses, Administrative expenses
Fixed cost assumptions
COPYRIGHT © 2014
• Costs of doing business
• May vary directly with sales volume
• DO increase as the business scales
• Expenses incurred with the next “unit” of
product or service
• Research through correspondence with outside
vendors
• Examples: Materials, direct/indirect labor, and
shipping costs
Variable cost assumptions
COPYRIGHT © 2014

19. March 21, 2014
19
What product(s) and/or service(s)
Quantities
Price
When (seasonality/cyclicality)?
T&C’s
Projected sales assumptions
COPYRIGHT © 2014
• Convert your business activity to cash activity
• When will cash be collected from customers?
May vary by product line and by customer
Generally assume 45 days---though currently
customers are extending to 60 days
• When do you pay your vendor’s invoices?
May vary by product line and by vendor
Generally assume 30-45 days
Need to create “referenceable” vendors
Cash flow assumptions
COPYRIGHT © 2014

20. March 21, 2014
20
Ben Littauer
Member, Boston Harbor Angels
"I like to see a business model spreadsheet with
the assumptions clearly called out as variables.
Then I can twiddle the knobs and see how
sensitive profits are to the assumptions."
COPYRIGHT © 2014
Developing The Financial Forecast
3. Creating the sales forecast
BEST - Predict by customer as detailed as
possible
….but include customer turnover
BETTER – Predict by market
COPYRIGHT © 2014

21. March 21, 2014
21
Developing The Financial Forecast
3. Creating the sales forecast (part 2)
How do I start? Market research!
• Trade associations
• Primary & secondary research
• Gov’t resources
US Census Bureau
IRS Statistical Data
Select your geography
COPYRIGHT © 2014
Developing The Financial Forecast
3. Creating the sales forecast (part 3)
Small
Client
Medium
Client
Large
Client
Average Hours Per
Week
4 Hours 8 Hours 16 Hours
Average Contract $
Per Week
$500 $1,250 $2,500
Predict by client (customer) types
• By market
• By size
Then ID certain characteristics
COPYRIGHT © 2014

22. March 21, 2014
22
Forecast Trap:
Why they call them “Gross Sales”
• Returns
• Discounts
• Coupons
• Rebates
• Chargebacks
• Markdowns
COPYRIGHT © 2014
Forecast Trap:
Do not over-estimate
first year revenue
(what, we can’t sell millions in first month?)
COPYRIGHT © 2014

23. March 21, 2014
23
Tip:
Integration
Must use an integrated model
Headcount added
Payroll and benefits calculation
Summarized employee costs
Income Statement
Cash Flow
COPYRIGHT © 2014
Question?
Is the methodology
Accrual or Cash?
COPYRIGHT © 2014

24. March 21, 2014
24
Tip:
Project payroll & benefits in detail
• Payroll & benefits are often the most costly
expense yet they are often neglected
• Project monthly to handle start dates
correctly (everyone cannot start in January)
• Match people adds with milestones
COPYRIGHT © 2014
Tip:
Projection Numbers are not separate from
the Company Plans
Company Plans
Milestone Projects Responsible Revenue/
Cost
Dates
COPYRIGHT © 2014

25. March 21, 2014
25
Multiple Model Trap:
One investor model,
Multiple options (triggers)
But…why not?
Fundamental changes made in base model
will not be reflected in the clones
COPYRIGHT © 2014
Tip:
Don’t forget the…..
Sales commissions – Direct connect them to your
sales staff’s (or sales rep) sales
Bonuses – Include with payroll
Recruiting expenses – Peg them to change in new
employees
Debt - Many forget to include Interest Expense on
the income statement even though the Company
has incurred Debt
COPYRIGHT © 2014

26. March 21, 2014
26
Tip:
Reasonableness
1. Once you think you are done take the
smell test --- Do the numbers really make
sense (i.e. can you really increase revenue
w/o an increase in costs)?
2. Do the Like-Kind test. Compare your
“metrics” versus your competition
COPYRIGHT © 2014
Creating the Statements
1. Consider it a Marketing Effort
2. Present the Pro-Forma Financial
Statement
3. Graph the Revenues, Income, and Cash
4. Present the Headcount
COPYRIGHT © 2014

27. March 21, 2014
27
Don’t let GustTM blow you away………
1. Set forecast in stone
2. Complete the boxes
3. Consistent with other docs and
financials
4. Be able to back it up (details?)
COPYRIGHT © 2014
Contact Information:
Email:
Website:
Twitter:
Phone:
Cell:
COPYRIGHT © 2014