surviving the first year: cash flow & budget planning bentley growth management, llc chris...
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Surviving the First Year:Cash Flow & Budget Planning
Bentley Growth Management, LLC
Chris [email protected]
610-247-4110
Bentley Growth Management, LLC
GREAT IDEA
STRONG MISSION
SUFFICIENT MARKET
VIABLE BUSINESS MODEL
Bentley Growth Management, LLC
EXIT
PROFITABILITY SCALABILITY
MARKET
COMPETITIONTEAM
DEMAND
Why Start-ups are Different No History
Use comparables Requires bold assumptions
Should be backed interviews State all assumptions Test what happens when you are wrong
Break business down to the key dials that control outcomes Growth Costs Timing
Bentley Growth Management, LLC
Key Controls Growth
Number of customers Number of users Number of distributers
Costs Commissions Capital expenses Material Marketing
Timing Customer norms User / payer dynamics Timing of cash
Bentley Growth Management, LLC
How to build a budget The relationship between revenue and expenses is developed through an
iterative process: Market research in identifying the market Understanding of the value proposition of the offering Understanding the channels of distribution Reasonable general and administrative costs
Steps Predict revenues Predict COGS Predict sales and marketing costs Predict start-up costs (where appropriate) Predict fixed and variable operating (non-production) costs Sensitivity analysis on line items Sensitivity analysis on the entire Pro Forma
Bentley Growth Management, LLC
Sales process, channels, cycle What is the process by which buyers buy?
Direct○ Outside sales force○ Internal sales force○ Web or catalogue○ Bidding
Distributors VAR’s System Integrators Partnerships (?)
Sales cycle: How long does it take to decide Meet Educate Propose Decide
Bentley Growth Management, LLC
Costs notes One line summary of every general and administrative cost,
with accompanying notes Repeated for a minimum of a three year period Include:
H/R costs- fully loaded Marketing costs Infrastructure costs Outside consultants and special project costs Does not include adjustments, investment interest, taxes or misc.
charges
Bentley Growth Management, LLC
PROFIT & LOSS STATEMENT
FINANCIAL PROJECTIONA UNITSB PRICEC=AXB SALESD COGSE=C-D GROSS MARGINF OPERATING EXPENSEG=E-F EBITDA
Bentley Growth Management, LLC
MARGINGROSS MARGINS REVEAL HOW MUCH A COMPANY EARNS TAKING INTO CONSIDERATION THE COSTS THAT IT INCURS FOR PRODUCING ITS PRODUCTS AND/OR SERVICES.
Bentley Growth Management, LLC
EXAMPLEHIGH GROWTH COMPANY$20 SALES$10 COGS$200 OP EXP
Bentley Growth Management, LLC
EXAMPLEHIGH GROWTH COMPANY$20 SALES$10 COGS$100 OP EXP
Bentley Growth Management, LLC
EXAMPLEHIGH GROWTH COMPANY$20 SALES$5 COGS$200 OP EXP
Bentley Growth Management, LLC
Dynamic Analysis Evaluate Strategic Options
Enter into two markets simultaneously or phased entry Risk / Reward Analysis
Sales projections off by 50% Sensitivity Analysis
Adjust inflation assumptions from 3-5% Long term growth Conversion rates
Bentley Growth Management, LLC
Thank You!
Bentley Growth Management, LLC
Bentley Growth Management, LLC
Chris [email protected]
610-247-4110