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Forecast Revenues and Costs
Stephen Lawrence and Frank Moyes Graduate School of Business University of Colorado Boulder, CO
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Financial Plan Income Statement Balance Sheet Cash Flow Summary
Assumptions 3 legged stool
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Operating Expenses Year 1 Year 2 Year 3 Marketing R & D Administration Total Cost of Goods Year 1 Year 2 Year 3 Direct Indirect Total Income Statement Year 1 Year 2 Year 3 Revenue COG’s Oper Expenses
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Fixed Assets (Plant) Year 1 Year 2 Year 3 Assets Depreciation Fixed Assets Working Capital Year 1 Year 2 Year 3 Receivables Inventory Balance Sheet Year 1 Year 2 Year 3 Receivables Inventory Fixed Assets
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Revenue Drivers 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
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Cost of Revenue Drivers
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
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Operating Expense Drivers
Sales & Marketing Customer acquisition cost Personnel expenses Sales commissions Exhibitions Brand building Tech support Customer service
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Operating Expense Drivers
Research and Development Personnel expenses Beta testing Time to market Patent and copyright application Prototyping Subcontracting General and Administration Recruiting expenses MIS expenses Office rent and utilities
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Financial Dynamics Who does the financial projections?
Investor questions Drivers Optimism vs. Pessimism Questions Why does GP increase from 45% to 52% in yr 2? If we reduce the investment in year 3 from $3KK to $1KK? OR, increase from $3KK to $5KK? Drivers: Local Net: Customer acquisition costs LAN Party: filling seats Schi-volo: Manufacturing costs Loco Mate: location Optimism vs Pessimism Investors VC's want size Angels want to be involved & a return Friends and Family want you to succeed Hostage to fortune
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Financials Spreadsheet Template
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