Date post: | 17-May-2015 |
Category: |
Business |
Upload: | mvanwunnik |
View: | 281 times |
Download: | 1 times |
Xavier Corman | Martin van Wunnik 107/02/2012 Xavier Corman | Martin van Wunnik 117/04/2012
MIC boostcamp - Finance workshop
Convert your business model into figures
Key parts and logic behind your financial plan
Catherine Blondiau
Rodolphe d'Udekem d'Acoz
Martin van Wunnik
13 Feb ’14
Xavier Corman | Martin van Wunnik 207/02/2012
Who are we ?
Martin van Wunnik
Catherine Blondiau
Rodolphe d'Udekem d'Acoz
13 Feb ’14
Xavier Corman | Martin van Wunnik 307/02/2012
This presentation is available for free:
http://www.slideshare.net/FinanceCoach24
13 Feb ’14
Xavier Corman | Martin van Wunnik 407/02/2012 Xavier Corman | Martin van Wunnik 417/04/2012
Morning session
13 Feb ’14
Xavier Corman | Martin van Wunnik 507/02/2012 Xavier Corman | Martin van Wunnik 517/04/2012
Why a Financial Plan ?
If you don't think about the future,
you cannot have one. John Golsworthy
where you want to go
how you are supposed to get there
You need to know
13 Feb ’14
Xavier Corman | Martin van Wunnik 607/02/2012 Xavier Corman | Martin van Wunnik 617/04/201213 Feb ’14
Xavier Corman | Martin van Wunnik 707/02/2012 Xavier Corman | Martin van Wunnik 717/04/201213 Feb ’14
Xavier Corman | Martin van Wunnik 807/02/2012 Xavier Corman | Martin van Wunnik 817/04/201213 Feb ’14
Xavier Corman | Martin van Wunnik 907/02/2012 Xavier Corman | Martin van Wunnik 917/04/2012
Financial Plan
Content
– Assumptions
– Profit & Loss
– Balance Sheet / Investment
– Cash-Flow -> Cash needed
– Valuation of the project
– Profitability / return of the project
13 Feb ’14
Xavier Corman | Martin van Wunnik 1007/02/2012 Xavier Corman | Martin van Wunnik 1017/04/201213 Feb ’14
Xavier Corman | Martin van Wunnik 1107/02/2012 Xavier Corman | Martin van Wunnik 1117/04/2012
Accounting: Profit & Loss (P&L)
Revenues (Sales…)
COGS (Cost of Sales)
General Expenditures
Personnel Costs
Depreciation
Financial cost
Profit
Taxes
EB
IT
13 Feb ’14
Xavier Corman | Martin van Wunnik 1207/02/2012 Xavier Corman | Martin van Wunnik 1217/04/2012
Accounting: Balance Sheet
Non Current Assets
(Actifs Immobilisés/
Vast Activa)
Equity + Reserves
(Capital/Kapitaal)
LT Debts
ST Debts
Current Assets
(Actifs circulants/
Vlottend Activa)
ACTIVE PASSIVE
13 Feb ’14
Xavier Corman | Martin van Wunnik 1307/02/2012 Xavier Corman | Martin van Wunnik 1317/04/2012
Required Cash-Flow
13 Feb ’14
Xavier Corman | Martin van Wunnik 1407/02/2012 Xavier Corman | Martin van Wunnik 1417/04/2012
How to finance your startup ?
Equity
LT Debts
ST Debts
13 Feb ’14
Xavier Corman | Martin van Wunnik 1507/02/2012 Xavier Corman | Martin van Wunnik 1517/04/2012
Sales
13 Feb ’14
Xavier Corman | Martin van Wunnik 1607/02/2012 Xavier Corman | Martin van Wunnik 1617/04/2012
Financial assumptions
How to estimate your Sales?
Catherine Blondiau
Rodolphe d’Udekem d’Acoz
Business and Finance Advisors @ IMPULSE.Brussels
Xavier Corman | Martin van Wunnik 1707/02/2012 Xavier Corman | Martin van Wunnik 1717/04/2012 17
SALES
Market potential = (Average Purchase * How Much * How Often)Market potential = (Average Purchase * How Much * How Often)
Xavier Corman | Martin van Wunnik 1807/02/2012 Xavier Corman | Martin van Wunnik 1817/04/2012
What ?
Xavier Corman | Martin van Wunnik 1907/02/2012 Xavier Corman | Martin van Wunnik 1917/04/2012
Price?
� Pricing of alternative solutions
� How much is the customer ready/willing to pay?
� Price:
- Not too low
- Not too high
- Coherent
� Evolution of the selling prices?
� What is the average amount per purchase?
Test it!Test it!
Xavier Corman | Martin van Wunnik 2007/02/2012 Xavier Corman | Martin van Wunnik 2017/04/2012
How Much?
� 2 methods to evaluate How Much you will be able to sell
Top Down
approach starts
with market and
industry data.
Top Down
approach starts
with market and
industry data.
Bottom Up
approach starts
with your
customers and
your resources
Bottom Up
approach starts
with your
customers and
your resources
Xavier Corman | Martin van Wunnik 2107/02/2012 Xavier Corman | Martin van Wunnik 2117/04/2012
How Much? – Top Down
� A Top Down analysis is calculated by determining the total market, then estimating your share of that market.
� It works in 3 steps :
1. Total Available Market (TAM) : How large is the market if all customers buy your product ?
2. Serviceable Available Market (SAM) : Focus on your owntechnology/services
3. Serviceable Obtainable Market (SOM) : Which realistic marketshare can be obtained by myself, considering competition, countries, my sales/distribution channels and other marketinfluences?
Xavier Corman | Martin van Wunnik 2207/02/2012 Xavier Corman | Martin van Wunnik 2217/04/2012
How Much? – Top Down : Example
� You want to sell internet access in Europe
� Each account will yield €250 per year.
� Expected revenue : € 1 billion (4 millions ×€250/customer)
TAM Total population of Europe 500 millions
SAM% of the population who want
internet access
80%
400 millions
SOM
Based on your market study, you
expect to achieve 1% of that potentiel
audience
1%
4 millions
Xavier Corman | Martin van Wunnik 2307/02/2012 Xavier Corman | Martin van Wunnik 2317/04/2012
How Much? – Bottom-Up
� This approach allow you to estimate the sales consideringthe client and your resources.
� The idea is to understand how much you will be able to sellconsidering the resources of your company :
- Time
- People
- Money
Xavier Corman | Martin van Wunnik 2407/02/2012 Xavier Corman | Martin van Wunnik 2417/04/2012
How Much? – Bottom Up: Example
� You want to sell internet access in Europe
� Each account will yield €250 per year.
� Expected revenue : € 150 000 (600×€250/customer)
We can bring on board five salespeople 5 salespeople
Each salesperson can make ten phone sales calls a day
that get through to a prospect.10 calls/day
There are 240 working days per year. 240 days
5% of the sales calls will convert within six months 5%
Estimated sales 600
Xavier Corman | Martin van Wunnik 2507/02/2012 Xavier Corman | Martin van Wunnik 2517/04/2012
How Much?
� Combine both approaches
- Use top-down analysis to estimate the market opportunity for your company—to decide whether you want to try it in the first place
- Use bottom-up analysis to get a realistic and testable estimate of what you can achieve within the first years of your startup
� Challenge both approaches and present a coherent global perspective of your estimated sales
� One-off/recurring/bundled sales?
� What are the supporting trends of your market ?
� How fast will the market grow?
Xavier Corman | Martin van Wunnik 2607/02/2012 Xavier Corman | Martin van Wunnik 2617/04/2012
When & How ?
� How and When are you going to sell your products ?
� Sales channels: Direct / Indirect – focus may shift over time
Xavier Corman | Martin van Wunnik 2707/02/2012 Xavier Corman | Martin van Wunnik 2717/04/2012
When & How ? - COCA
� Impact on the cost of customer acquisition (COCA)
€?
Xavier Corman | Martin van Wunnik 2807/02/2012 Xavier Corman | Martin van Wunnik 2817/04/2012
When & How ? - COCA
� Impact on the cost of customer acquisition (COCA) :
- It costs money to achieve each sales
- How much resources (time, €, HR) does it require (cfBottom Up approach)?
- Includes unsuccessful prospects
- To be taken into account in your financial plan
- Choice of channels :
� Financially sustainable?
Xavier Corman | Martin van Wunnik 2907/02/2012 Xavier Corman | Martin van Wunnik 2917/04/2012
When & How ? - COCA & LTVOAC
� COCA & Life time value of an acquired customer
- Cost of Customer Acquisition (COCA)
- Life time value of an acquired customer (LTVOAC)
- Each acquired customer will provide you with revenues during his life time (as a client of your company)
- Put those revenues in perspective with the COCA
COCA = Sales & Marketing Costs / Customers
LTVOAC = revenue over life time x gross margin
Xavier Corman | Martin van Wunnik 3007/02/2012 Xavier Corman | Martin van Wunnik 3017/04/2012
When & How ? - COCA & LTVOAC
� Lifetime value of a gym member who spends €20 every month for 3 years?
- €20 X 12 months X 3 years = €720 in total revenue (or €240 per year)
� How much will it cost you to acquire this client? Allowable acquisition cost?
� How to optimize LTVOAC?
� Discount while managing CF
Xavier Corman | Martin van Wunnik 3107/02/2012 Xavier Corman | Martin van Wunnik 3117/04/2012
Don’t Forget …
� Probably one of the most important parameters … and
certainly the most difficult to estimate !!
� Consider different (sub)categories of products and/or
services
� Consider the volume of units (products/services) sold and the
respective selling prices
� Outputs
– Per product (category)
– Per client / market / segment
– Per channel
– Combine ?
Xavier Corman | Martin van Wunnik 3207/02/2012 Xavier Corman | Martin van Wunnik 3217/04/2012
Don’t Forget …
� Gross sales or Net sales (e.g. after commission, bad debts…)
� Consider the initial volumes and the growth rates for each line of products/services without forgetting the market’s dynamic (seasonality, evolution of the selling prices, growth…)
� Be aware of potential delays and lower (initial) volumes &
growth rates than expected.
� Consider the sales without VAT (unless you do not
recuperate it !)
Xavier Corman | Martin van Wunnik 3307/02/2012 Xavier Corman | Martin van Wunnik 3317/04/2012
Don’t Forget …
� The sales data should be based on tangible elements andhypothesis directly linked to the business plan
� In no circumstances should the volume of sales be based on the costs … : “ spontaneous sales creation ” in order to achieve break even or benefit on paper does not help and could possibly endanger your credibility in the eyes of third parties
� To keep in mind:
- User friendliness, avoid too much items
- Internal logic : price, discount, cost of sales, payment conditions… & cycle
Xavier Corman | Martin van Wunnik 3407/02/2012 Xavier Corman | Martin van Wunnik 3417/04/2012
Impulse template
13 Feb ’14
Xavier Corman | Martin van Wunnik 3507/02/2012 Xavier Corman | Martin van Wunnik 3517/04/2012
Afternoon session
13 Feb ’14
Xavier Corman | Martin van Wunnik 3607/02/2012 Xavier Corman | Martin van Wunnik 3617/04/2012
Accounting: Profit & Loss (P&L)
Revenues (Sales…)
COGS (Cost of Sales)
General Expenditures
Personnel Costs
Depreciation
Financial cost
Profit
Taxes
EB
IT
13 Feb ’14
Xavier Corman | Martin van Wunnik 3707/02/2012 Xavier Corman | Martin van Wunnik 3717/04/2012
Costs
13 Feb ’14
Xavier Corman | Martin van Wunnik 3807/02/2012 Xavier Corman | Martin van Wunnik 3817/04/2012
Costs assumptions
Catherine Blondiau
Rodolphe d’Udekem d’Acoz
Business and Finance Advisors @ IMPULSE.Brussels
Xavier Corman | Martin van Wunnik 3907/02/2012 Xavier Corman | Martin van Wunnik 3917/04/2012
• Sales
• Costs of goods/services sold
• (Other) Operating Costs
Xavier Corman | Martin van Wunnik 4007/02/2012 Xavier Corman | Martin van Wunnik 4017/04/2012
• = Cost of Sales
• Variable costs directly linked to the goods / services sold and highly or totally proportional to the sales
• Can be close to zero for some kind of activities
• Much easier to predict than the volume of sales itself(should logically be based on tangible elements)
COGS : Cost of Goods / Services sold
Xavier Corman | Martin van Wunnik 4107/02/2012 Xavier Corman | Martin van Wunnik 4117/04/2012
• Two main categories:
a) goods purchased and/or manufactured
NB: attention point: means a potential inventoryand an additional financial need
b) other costs, linked to sales, with no impact on inventory
NB: eg. Transport, paiment or packaging costs
COGS : Cost of Goods / Services sold
Xavier Corman | Martin van Wunnik 4207/02/2012 Xavier Corman | Martin van Wunnik 4217/04/2012
• Deducted from the sales, it will give the grossmargin or gross revenues
NB: often an important parameter, notably to monitor the evolution of profitability & to makecomparison with company in similar business
• In some cases, there is a grey zone whethersome costs « should » be integrated in the COGS or the general expenses, with some freedom to choose
COGS : Cost of Goods / Services sold
Xavier Corman | Martin van Wunnik 4307/02/2012 Xavier Corman | Martin van Wunnik 4317/04/2012
• Do not forget that the cost per unit sold canchange following different parameters such as inflation or the evolution in the volume of sales (bargaining power with suppliers)
COGS : Cost of Goods / Services sold
Xavier Corman | Martin van Wunnik 4407/02/2012 Xavier Corman | Martin van Wunnik 4417/04/2012
• A margin is a relative concept ! Be aware that it’s all about points of view. Otherwise, it could lead to misinterpretation.
for example, for the gross margin, it could be expressedin terms of:
- an amount in currency
- a percentage of the sales (without VAT), which is the most commonly used approach
- but also sometimes as a percentage of the costs(quite unusual for gross margin but stil …)
Margin : relative notion
Xavier Corman | Martin van Wunnik 4507/02/2012 Xavier Corman | Martin van Wunnik 4517/04/2012
Cost of goods / services sold: 100 €
Sales: 150 €
- Margin expressed in €: 50 €
- Margin expressed as % of costs: 50%
- Margin expressed as % of sales: 30%
Margin : relative notion
Xavier Corman | Martin van Wunnik 4607/02/2012 Xavier Corman | Martin van Wunnik 4617/04/2012
• Sales
• Costs of goods/services sold
• (Other) Operating Costs
Xavier Corman | Martin van Wunnik 4707/02/2012 Xavier Corman | Martin van Wunnik 4717/04/2012
• General Expenses
• Or « fixed » costs
• Or selling, general & administrative exp. (SGA)
• Rent & Maintenance expenses
• Utilities, Telephone, Internet & Licences, etc
• Insurance & Bank fees (not the financial interests !)
• Third parties / subcontracters, notably : Accountants, Lawyer fees, External sales, etc
General Expenses or « Fixed » costs
Xavier Corman | Martin van Wunnik 4807/02/2012 Xavier Corman | Martin van Wunnik 4817/04/2012
• Marketing & Communication expenses
NB: not to be underestimated !
• Travel & representation expenses
• HR costs other than salary and related costs
• Taxes (not the taxes on profit)
• … Unexpected expenses !
General Expenses or « Fixed » costs
Xavier Corman | Martin van Wunnik 4907/02/2012 Xavier Corman | Martin van Wunnik 4917/04/2012
• R&D (if not integrated in the investments)
• Use of tangible assets (if not integrated in investments)
• Expenses versus Investments
• Profit & Loss account versus Treasury
• Consider what could/should be considered as pure costs, to be opposed to costs than can or have to be« activated » (on the balance sheet) & amortized
General Expenses or « Fixed » costs
Xavier Corman | Martin van Wunnik 5007/02/2012 Xavier Corman | Martin van Wunnik 5017/04/2012
• Employees versus Workers
• Director (self-employed) versus staff under contract
NB: social costs linked to the shareholder of a company working for it under a self-employed statusis not to be included in the FP of the company, unless specifically foreseen
The differences in the fiscal status and in the costs berd by the company for bothcategories are quite significant(eg multiplication effect x 1.34 x 13.92 !)
General Expenses : HR costs
Xavier Corman | Martin van Wunnik 5107/02/2012 Xavier Corman | Martin van Wunnik 5117/04/2012
Amortization, Depreciation & Provisions :(= costs not implying a direct cash out)
Amortization is automatically calculated in the template based on the investments (and the amortization tenor)
Depreciation & Provisions are not included at thisstage (not relevant for a starter)
Costs with no impact on treasury
Xavier Corman | Martin van Wunnik 5207/02/2012 Xavier Corman | Martin van Wunnik 5217/04/2012
Pictures © by Sheila Batiz
13 Feb ’14
Xavier Corman | Martin van Wunnik 5307/02/2012 Xavier Corman | Martin van Wunnik 5317/04/2012
IMPULSE
Too many things to list them all here! We inform you, we guide you and we
accompany you in a whole range of areas such as creating an
enterprise, financing, innovation, town planning, environmental
permits, partnerships … by means of newsletters, websites, seminars or
tailored coaching.
Briefly, we create a complete ecosystem in which you can grow as an
entrepreneur!
More info on our websites : www.impulse.irisnet.be - www.entreprendreabruxelles.bewww.ecosubsibru.be – www.monstarterkit.be – www.brutrade.be
Xavier Corman | Martin van Wunnik 5407/02/2012 Xavier Corman | Martin van Wunnik 5417/04/2012
Martin van Wunnik
0475 / 96.95.91
13 Feb ’14