Empfohlen
Weitere Àhnliche Inhalte
Was ist angesagt?
Was ist angesagt? (20)
Ăhnlich wie 070801 financial presentation
Ăhnlich wie 070801 financial presentation (20)
KĂŒrzlich hochgeladen
KĂŒrzlich hochgeladen (20)
070801 financial presentation
- 1. Financial Projections forFinancial Projections for Start-Up BusinessesStart-Up Businesses Mark LeslieMark Leslie mleslie@leslieventures.commleslie@leslieventures.com
- 2. Financial ProjectionsFinancial Projections âș Why do Financial Plan?Why do Financial Plan? âș Basic Building BlocksBasic Building Blocks âș Key VariablesKey Variables âș Bottoms up / Tops DownBottoms up / Tops Down âș Model CompaniesModel Companies âș Planning IssuesPlanning Issues âș Financial Models â the crucible to test ideasFinancial Models â the crucible to test ideas âș ââWhat-ifâ ScenariosWhat-ifâ Scenarios âș Rule Number 1Rule Number 1
- 3. Why do a financial PlanWhy do a financial Plan âș Canât raise money without one?Canât raise money without one? âș Feasibility of business modelFeasibility of business model âș Understand the key variables for your businessUnderstand the key variables for your business âș Understand the cash requirementsUnderstand the cash requirements âș Sharpens focus on key planning areasSharpens focus on key planning areas âș Focus on key operating metricsFocus on key operating metrics âș Oh, yeahâŠOh, yeahâŠ ï§ Canât raise money without one!!!Canât raise money without one!!!
- 4. Basic Building Blocks âBasic Building Blocks â Department BudgetDepartment Budget Eng BudgetEng Budget q1q1 q2q2 q3q3 q4q4 y1y1 y2y2 head 1head 1 head 2head 2 Salary totalSalary total Salary ovhdSalary ovhd DepreciationDepreciation expensesexpenses capitalcapital
- 5. Key VariablesKey Variables Department BudgetDepartment Budget âșHeadcountHeadcount ï§ Salary / overhead /Salary / overhead / recruitingrecruiting ï§ Facilities /Facilities / communications / ITcommunications / IT ï§ T& E / otherT& E / other âșCapital EquipmentCapital Equipment Dept Budget
- 6. Key VariablesKey Variables Department BudgetDepartment Budget âș G&AG&A ï§ HeadcountHeadcount âș Exec office / CFOExec office / CFO ï§ legallegal ï§ AccountingAccounting ï§ Corporate allocatable expensesCorporate allocatable expenses âș IT and communicationsIT and communications infrastructureinfrastructure âș Real estateReal estate Dept Budget
- 7. Key VariablesKey Variables Department BudgetDepartment Budget âșEngineeringEngineering ï§ HeadcountHeadcount ï§ NRENRE ï§ consulting (e.g. FCCconsulting (e.g. FCC approval)approval) ï§ prototypes, expensedprototypes, expensed materialsmaterials ï§ product enhancements andproduct enhancements and sustaining engineeringsustaining engineering Dept Budget
- 8. Key VariablesKey Variables Department BudgetDepartment Budget âșMarketingMarketing ï§ HeadcountHeadcount ï§ product launchproduct launch ï§ Advertising / PRAdvertising / PR ï§ seminars, trade shows,seminars, trade shows, web siteweb site ï§ brochures, literaturebrochures, literature Dept Budget
- 9. Key VariablesKey Variables Department BudgetDepartment Budget âșSalesSales ï§ HeadcountHeadcount âșMgrs, SEâsMgrs, SEâs ï§ Productivity modelProductivity model ï§ partnerships, coop.partnerships, coop. AdvertisingAdvertising ï§ remote officesremote offices Dept Budget
- 10. Key VariablesKey Variables Department BudgetDepartment Budget âșHeadcountHeadcount âșHeadcountHeadcount âșHeadcountHeadcount Dept Budget
- 11. Key Variables âKey Variables â Capital EquipmentCapital Equipment âșCapital equipment per headCapital equipment per head âșNRENRE âșTechnology BuyoutTechnology Buyout âșToolingTooling âșIT infrastructureIT infrastructure âșPurchased BldgsPurchased Bldgs Corp Cap Budget
- 12. Basic Building BlocksBasic Building Blocks Corp Rollup and Cap ScheduleCorp Rollup and Cap Schedule Dept Budget Dept Budget Dept Budget Dept Budget Corp Exp Budget Corp Cap Budget
- 13. Key VariablesKey Variables Revenue Model (cross checked)Revenue Model (cross checked) âș MarketMarket ï§ Available / ServedAvailable / Served âș PricePrice ï§ List / discount / Avg selling priceList / discount / Avg selling price âș Forecast â by ProductForecast â by Product ï§ Product mixProduct mix ï§ Trajectory of RampTrajectory of Ramp âș Forecast â by ChannelForecast â by Channel ï§ Net cost by channelNet cost by channel âș Forecast â by Sales CapacityForecast â by Sales Capacity ï§ Sales Yield (sum of quota less safetySales Yield (sum of quota less safety margin)margin) ï§ Productivity rampProductivity ramp ï§ Attrition calculationAttrition calculation ï§ Staffing planStaffing plan âș Cost for customer acquisitionCost for customer acquisition Revenue Model
- 14. Key VariablesKey Variables Cost ModelCost Model âș ProductProduct ï§ Estimated BOMEstimated BOM âș Rush chargesRush charges âș Design changesDesign changes âș WarrantyWarranty âș Obsolescence / writeâoffsObsolescence / writeâoffs ï§ LaborLabor ï§ VolumeVolume âș ServicesServices ï§ LaborLabor ï§ TrainingTraining ï§ EfficiencyEfficiency Cost Model
- 15. Basic Building Blocks â IncomeBasic Building Blocks â Income StatementStatement Revenue Model Income Statement Revenue COGS Expenses Profit Product Cost Model Dept Budget Dept Budget Dept Budget Dept Budget
- 16. Key VariablesKey Variables Capitalization (Funding) PlanCapitalization (Funding) Plan âș Equity Financing â amount and timingEquity Financing â amount and timing ï§ SeedSeed ï§ Startup AStartup A ï§ Development BDevelopment B ï§ Mezzanine CMezzanine C ï§ IPOIPO ï§ Post IPOPost IPO âș Debt FinancingDebt Financing ï§ Capital equipment LeasingCapital equipment Leasing ï§ Working capital bank LineWorking capital bank Line ï§ Convertible debt securitiesConvertible debt securities Capitalization Plan
- 17. Key Variables âKey Variables â Capital EquipmentCapital Equipment âșCost per headCost per head âșNRENRE âșTechnology BuyoutTechnology Buyout âșToolingTooling âșIT infrastructureIT infrastructure âșPurchased BldgsPurchased Bldgs Corp Cap Budget
- 18. Key Variables âKey Variables â Working Capital AssumptionsWorking Capital Assumptions âșAccount ReceivableAccount Receivable âșAccounts PayableAccounts Payable âșInventoryInventory Work Cap Assumptions
- 19. Basic Building Blocks â BalanceBasic Building Blocks â Balance Sheet and Cash FlowSheet and Cash Flow Balance Sheet Cash Flow Dept Budget Dept Budget Dept Budget Dept Budget Revenue Model Income Statement Revenue COGS Expenses Profit Product Cost Model Capitalization Plan Corp Cap BudgetWork Cap Assumptions
- 20. Bottoms-up / Tops-downBottoms-up / Tops-down âș Bottom-upBottom-up ï§ Built from detailsBuilt from details ï§ Variable assumptionsVariable assumptions ï§ Start up and growth stageStart up and growth stage âș Top-downTop-down ï§ ââmodelâ of the mature companymodelâ of the mature company ï§ Similar to other companies / products / marketsSimilar to other companies / products / markets âș The Five-Year PlanThe Five-Year Plan ï§ Year 5 = model company (or close to it)Year 5 = model company (or close to it) ï§ Year 1 = raw start upYear 1 = raw start up ï§ Year 2Year 2 ï ï 5 development stage to mature company5 development stage to mature company
- 21. The Model CompanyThe Model Company âș Income StatementIncome Statement ï§ RevenueRevenue ï§ Gross MarginGross Margin ï§ Departmental expenses as percentage of revenueDepartmental expenses as percentage of revenue ï§ Operating IncomeOperating Income âș Balance sheet itemsBalance sheet items ï§ DSO (A/R days sales outstanding)DSO (A/R days sales outstanding) ï§ Inventory turnsInventory turns âș Employee MetricsEmployee Metrics ï§ Revenue / employeeRevenue / employee ï§ Expense / employeeExpense / employee ï§ Expenses as a percent of revenueExpenses as a percent of revenue
- 22. The Five Year PlanThe Five Year Plan S t a r t u p ï M o d e l Income Statement Balance Sheet Cash Flow Y1 Income Statement Balance Sheet Cash Flow Y4 Income Statement Balance Sheet Cash Flow Y2 Income Statement Balance Sheet Cash Flow Y5
- 23. Critical AssumptionsCritical Assumptions âș Income StatementIncome Statement ï§ Unit RevenueUnit Revenue ï§ Number of unitsNumber of units ï§ Cost of goods and servicesCost of goods and services ï§ Operating costsOperating costs âș R&DR&D âș S G & AS G & A ï§ Interest ratesInterest rates âș Balance SheetBalance Sheet ï§ Collections of receivablesCollections of receivables ï§ Inventory turnsInventory turns ï§ Capital equipment and depreciationCapital equipment and depreciation ï§ Payable timingPayable timing ï§ Debt and equity financing availableDebt and equity financing available
- 24. Intergalactic Optical Nanotubes, Inc.Intergalactic Optical Nanotubes, Inc. (ION)(ION) Income StatementIncome Statement Y1Y1 Y2Y2 Y3Y3 Y4Y4 Y5Y5 RevenueRevenue 00 2.02.0 20.020.0 160.0160.0 350.0350.0 Gross MrgnGross Mrgn 00 1.61.6 16.016.0 128.0128.0 280.0280.0 EngineeringEngineering 2.02.0 2.52.5 2.52.5 2.52.5 2.52.5 SG&ASG&A 0.50.5 1.51.5 1.51.5 1.51.5 1.51.5 Total Op ExTotal Op Ex 2.52.5 4.04.0 4.04.0 4.04.0 4.04.0 Op ProfitOp Profit (2.5)(2.5) (2.0)(2.0) 12.012.0 124.0124.0 176.0176.0
- 25. Model Companies â Operating Stacks ($M)Model Companies â Operating Stacks ($M) CiscoCisco DellDell MicrosoftMicrosoft YahooYahoo RambusRambus RevenueRevenue 18,87818,878 35,40435,404 32,18732,187 953953 9797 CogsCogs 5,6455,645 29,05529,055 5,6865,686 163163 88 Gross MarginGross Margin 13,23313,233 6,3496,349 26,50126,501 790790 8989 EngEng 3,1353,135 455455 4,6594,659 143143 2222 SG&ASG&A 4,8184,818 3,0503,050 8,6258,625 537537 3535 Total Op ExpTotal Op Exp 8,3518,351 3,5053,505 13,28413,284 702702 5757 OperatingOperating IncomeIncome 4,8824,882 2,8442,844 13,21713,217 8888 3131 Net IncomeNet Income 3,5783,578 2,1222,122 9,9939,993 4343 2525 EPSEPS .50.50 .91.91 .19.19 .20.20 .20.20
- 26. Model Companies â Common Sizing (%)Model Companies â Common Sizing (%) CiscoCisco DellDell MicrosoftMicrosoft YahooYahoo RambusRambus RevenueRevenue 100100 100100 100100 100100 100100 CogsCogs 3030 8282 1818 1717 88 Gross MarginGross Margin 7070 1818 8282 8383 9292 EngEng 1717 11 1515 1515 2323 SG&ASG&A 2525 99 2626 5656 3636 Total Op ExpTotal Op Exp 4444 1010 4242 7474 5959 Operating IncomeOperating Income 2626 88 4141 99 3232 Net IncomeNet Income 1919 66 3131 4.54.5 2626
- 27. Model Companies â Market ValueModel Companies â Market Value CiscoCisco DellDell MicrosoftMicrosoft YahooYahoo RambusRambus Market Cap ($B)Market Cap ($B) 146146 9595 317317 33 22 Revenue ($B)Revenue ($B) 1919 3535 3232 11 .1.1 Multiple ofMultiple of RevenueRevenue 88 33 1010 33 2020 Earnings ($B)Earnings ($B) 3.63.6 2.12.1 1010 .04.04 .02.02 Multiple ofMultiple of EarningsEarnings 4141 3838 3131 7575 100100
- 28. Planning IssuesPlanning Issues âș Revenues (always) take longerRevenues (always) take longer ï§ Sales forecasts are optimisticSales forecasts are optimistic ï§ Un-tested âsales modelâUn-tested âsales modelâ ï§ Unrealistic productivity assumptionsUnrealistic productivity assumptions âș Margins arenât as great as plannedMargins arenât as great as planned ï§ Design creepDesign creep ï§ Hidden costs like yield, scrap, obsolescence, warrantyHidden costs like yield, scrap, obsolescence, warranty âș Operating expenses higher than planOperating expenses higher than plan âș Capital needs are high . . . and not freeCapital needs are high . . . and not free ï§ Cost of capital is inversely proportional to the execution of the planCost of capital is inversely proportional to the execution of the plan
- 29. Sanity TestingSanity Testing âșIncome StatementIncome Statement ï§ Rate of Sales GrowthRate of Sales Growth ï§ StaffingStaffing âșGrowthGrowth âșNon-growthNon-growth ï§ (engineer one product, sell it forever)(engineer one product, sell it forever) ï§ ProfitsProfits
- 30. Sanity TestingSanity Testing âșBalance SheetBalance Sheet ï§ A/R, Inventory levelsA/R, Inventory levels ï§ Capitalization PlanCapitalization Plan âșHow much money to build what size business?How much money to build what size business? ï§ Can your investors realize 10 â 100X return onCan your investors realize 10 â 100X return on investment?investment? âșMore information later on VC fundingMore information later on VC funding âșProxy â compare your plan to theProxy â compare your plan to the experience of existing companiesexperience of existing companies
- 31. Financial Models --Financial Models -- The crucible to test your ideas!The crucible to test your ideas! âșIf you understand the model, feasibility ofIf you understand the model, feasibility of ideas are more self-evidentideas are more self-evident âșMake Key Assumptions into variablesMake Key Assumptions into variables ï§ Investigate alternativesInvestigate alternatives ï§ Sensitivity AnalysisSensitivity Analysis âșDetermine CASH consumptionDetermine CASH consumption âșUnderstand the path to profitabilityUnderstand the path to profitability
- 32. Modeling âModeling â âWhat-ifâ ScenariosâWhat-ifâ Scenarios âșDocument assumptionsDocument assumptions ï§ Facilitates changes in futureFacilitates changes in future ï§ Operational (e.g.,product engineeringOperational (e.g.,product engineering plan/milestones)plan/milestones) âșDevelop a feel for the dynamicsDevelop a feel for the dynamics ï§ E.g., Reduced investment in engineering =E.g., Reduced investment in engineering = product schedule slip of X months = revenueproduct schedule slip of X months = revenue delaydelay
- 33. Rule Number 1Rule Number 1 Cash is OxygenâŠCash is Oxygen⊠âŠâŠOxygen isOxygen is LifeLife
- 34. Financial Projections forFinancial Projections for Start-Up BusinessesStart-Up Businesses Mark LeslieMark Leslie mleslie@leslieventures.commleslie@leslieventures.com 650.561.1228650.561.1228
- 35. Copyright Mark LeslieCopyright Mark Leslie One Final ThoughtâŠOne Final ThoughtâŠ
- 36. Copyright Mark LeslieCopyright Mark Leslie it is regret for the things we didit is regret for the things we did not do that is inconsolablenot do that is inconsolable.. Sidney J. Harris (1917â86)Sidney J. Harris (1917â86) Regret for the things we did can be tempered by time;