2. Why do a financial Plan  Can’t raise money without one?  Feasibility of business model  Understand the key variables for your business  Understand the cash requirements  Sharpens focus on key planning areas  Focus on key operating metrics  Oh, yeah… ◦ Can’t raise money without one!!!

4.  Pricing?  Cost per Unit?  Estimate of Volume Sales?  Operating Expenses?  Property, Plant and Equipment?

5.  Number of customers, transactions or units  Price per customer, transaction or unit  Average revenue per customer or transaction  Distribution channel discount  Market penetration  Response rate  Churn rate  Growth rate  New services or product

6.  Personnel costs (labor and/or salary)  Materials costs  Yields  Website operating costs  Systems costs  Warehouse and shipping expenses  Returns  Outsourcing expenses  Lease and/or rental expenses  Cost reductions  Depreciation large capital expenditures

7.  Sales & Marketing ◦ Customer acquisition cost ◦ Personnel expenses ◦ Sales commissions ◦ Exhibitions ◦ Brand building ◦ Tech support ◦ Customer service

8.  Research and Development ◦ Personnel expenses ◦ Beta testing ◦ Time to market ◦ Patent and copyright application ◦ Prototyping ◦ Subcontracting  General and Administration ◦ Personnel expenses ◦ Recruiting expenses ◦ MIS expenses ◦ Office rent and utilities

9.  Variable – those expenses that vary with revenue (if no revenue, no cost)  Fixed – expenses that are there no matter what  Mixed – part variable, part fixed  Contribution Margin = Sales – Variable Costs – Fixed Costs

10.  Refer to Feasibility handout

11.  Financial Analysis Section in Bplan  Appendix  5 Year Annual Income Statement Projection, Balance Sheet, and Cash Flow  2 Year Monthly Income Statement  2 Year Quarterly Balance Sheet and Cash Flow  Assumptions Page

12.  2-3 pages in body of Business Plan text  Income Statement Summary – 5 Years (Annual)  Key Stats: Breakeven by Sales, Return on Assets, Return on Sales, etc.  Source of Funds: Amount of Funding needed, type of financing, timing of financing  Use of Funds: For initial round of financing, how will spend  Exit Strategy: under the assumptions of plan, what will exit be, return to investor(s).