pafi-10 mai-rodrigo sepulveda schulz- pnl make revenue
Post on 08-Apr-2018
216 Views
Preview:
TRANSCRIPT
8/6/2019 PAFI-10 mai-Rodrigo Sepulveda Schulz- Pnl Make Revenue
http://slidepdf.com/reader/full/pafi-10-mai-rodrigo-sepulveda-schulz-pnl-make-revenue 1/39
Business models, PnLs - for startups
http://www.flickr.com/photos/kidswithcourage/4588175282/sizes/o/
(cc) BY NC SA, Rodrigo SEPULVEDA SCHULZ - www.rodrigosepulveda.com - May 2011
1
8/6/2019 PAFI-10 mai-Rodrigo Sepulveda Schulz- Pnl Make Revenue
http://slidepdf.com/reader/full/pafi-10-mai-rodrigo-sepulveda-schulz-pnl-make-revenue 2/39
Summary
• Business models
• Generic PnL
• Key insights (think KPI!)
2
8/6/2019 PAFI-10 mai-Rodrigo Sepulveda Schulz- Pnl Make Revenue
http://slidepdf.com/reader/full/pafi-10-mai-rodrigo-sepulveda-schulz-pnl-make-revenue 3/39
1. Business models
3
8/6/2019 PAFI-10 mai-Rodrigo Sepulveda Schulz- Pnl Make Revenue
http://slidepdf.com/reader/full/pafi-10-mai-rodrigo-sepulveda-schulz-pnl-make-revenue 4/39
Revenue = Price x Qty
x 3
4
8/6/2019 PAFI-10 mai-Rodrigo Sepulveda Schulz- Pnl Make Revenue
http://slidepdf.com/reader/full/pafi-10-mai-rodrigo-sepulveda-schulz-pnl-make-revenue 5/39
R = R1 + R2 + ... = P1 x Q1 + P2 x Q2 + ...
5
8/6/2019 PAFI-10 mai-Rodrigo Sepulveda Schulz- Pnl Make Revenue
http://slidepdf.com/reader/full/pafi-10-mai-rodrigo-sepulveda-schulz-pnl-make-revenue 6/39
let’s simplify with : R = P x Q~ ~
- are you a VOLUME business ?
- are you a PRICE based business ?
6
8/6/2019 PAFI-10 mai-Rodrigo Sepulveda Schulz- Pnl Make Revenue
http://slidepdf.com/reader/full/pafi-10-mai-rodrigo-sepulveda-schulz-pnl-make-revenue 7/39
Volume business (usually low margin)
7
8/6/2019 PAFI-10 mai-Rodrigo Sepulveda Schulz- Pnl Make Revenue
http://slidepdf.com/reader/full/pafi-10-mai-rodrigo-sepulveda-schulz-pnl-make-revenue 8/39
Price-based business (usually high margin)
8
8/6/2019 PAFI-10 mai-Rodrigo Sepulveda Schulz- Pnl Make Revenue
http://slidepdf.com/reader/full/pafi-10-mai-rodrigo-sepulveda-schulz-pnl-make-revenue 9/39
P
Q
the famous ‘demand curve’
10 €
100
R = 10 € x 100 = 1.000 €
R’ = 5 € x 200 = 1.000 €
5 €
200 500
2 €
R” = 2 € x 500 = 1.000 €
9
8/6/2019 PAFI-10 mai-Rodrigo Sepulveda Schulz- Pnl Make Revenue
http://slidepdf.com/reader/full/pafi-10-mai-rodrigo-sepulveda-schulz-pnl-make-revenue 10/39
can you be a volume + price based business?
10
8/6/2019 PAFI-10 mai-Rodrigo Sepulveda Schulz- Pnl Make Revenue
http://slidepdf.com/reader/full/pafi-10-mai-rodrigo-sepulveda-schulz-pnl-make-revenue 11/39
P
Q
shift the ‘demand curve’ - hard, requires a unique
value proposition sustained by heavy marketing
10 €
100
R = 10 € x 500 = 5.000 €
(5x)
5 €
200 500
2 €
11
8/6/2019 PAFI-10 mai-Rodrigo Sepulveda Schulz- Pnl Make Revenue
http://slidepdf.com/reader/full/pafi-10-mai-rodrigo-sepulveda-schulz-pnl-make-revenue 12/39
http://www.amazon.com/Microeconomics-7th-Robert-Pindyck/dp/0132080230/ref=sr_1_1?ie=UTF8&qid=1304956318&sr=8-1
Read more:
12
8/6/2019 PAFI-10 mai-Rodrigo Sepulveda Schulz- Pnl Make Revenue
http://slidepdf.com/reader/full/pafi-10-mai-rodrigo-sepulveda-schulz-pnl-make-revenue 13/39
Costs = Variable Costs x Qty + Fixed Costs
13
8/6/2019 PAFI-10 mai-Rodrigo Sepulveda Schulz- Pnl Make Revenue
http://slidepdf.com/reader/full/pafi-10-mai-rodrigo-sepulveda-schulz-pnl-make-revenue 14/39
Variable Costs : anything that can be directly
correlated with ONE extra sale of product/service
• COGS : Cost of Good Sold = Cost of Revenue
• usually the cost of raw materials necessary to produce a new
product,
or the cost of original item if re-selling
• add to that anything that can be linked directly:
• commission on each sale; % fee on bank; average shipping &
handling cost (if not added)...
• remember to think in AVERAGE terms
14
8/6/2019 PAFI-10 mai-Rodrigo Sepulveda Schulz- Pnl Make Revenue
http://slidepdf.com/reader/full/pafi-10-mai-rodrigo-sepulveda-schulz-pnl-make-revenue 15/39
Fixed Costs (standardized) -
main goal is to make them variable
• Sales & marketing (S&M)
• Product / R&D / Technology
• HR : can be factored almost into Product,
S&M, G&A
• General & Administration (G&A) : rent,
lawyers, travel & expenses...
15
8/6/2019 PAFI-10 mai-Rodrigo Sepulveda Schulz- Pnl Make Revenue
http://slidepdf.com/reader/full/pafi-10-mai-rodrigo-sepulveda-schulz-pnl-make-revenue 16/39
Margin = Revenue - Costs
• M = R - C
• M = ( average Price x Q ) - ( fixed costs + variable cost x Q)
• M = (average price - variable cost) x Q - fixed costs
• M = (Unit margin) x Q - FC
16
8/6/2019 PAFI-10 mai-Rodrigo Sepulveda Schulz- Pnl Make Revenue
http://slidepdf.com/reader/full/pafi-10-mai-rodrigo-sepulveda-schulz-pnl-make-revenue 17/39
focusing on unit margin gives you great insights
• M = (Unit margin) x Q - FC means
• M > 0 only if
• unit margin is > 0
• (Unit margin x Q) > fixed costs
can you keep
your fixed
costs low ?
are you a
price based
business ?
are you a
volume based
business ?
17
8/6/2019 PAFI-10 mai-Rodrigo Sepulveda Schulz- Pnl Make Revenue
http://slidepdf.com/reader/full/pafi-10-mai-rodrigo-sepulveda-schulz-pnl-make-revenue 18/39
2. Generic PnL
18
8/6/2019 PAFI-10 mai-Rodrigo Sepulveda Schulz- Pnl Make Revenue
http://slidepdf.com/reader/full/pafi-10-mai-rodrigo-sepulveda-schulz-pnl-make-revenue 19/39
startup finance is like wartime medicine :
ugly but works
http://www.olive-drab.com/od_medical_www.php
19
8/6/2019 PAFI-10 mai-Rodrigo Sepulveda Schulz- Pnl Make Revenue
http://slidepdf.com/reader/full/pafi-10-mai-rodrigo-sepulveda-schulz-pnl-make-revenue 20/39
Let’s start a T-shirt business !
20
8/6/2019 PAFI-10 mai-Rodrigo Sepulveda Schulz- Pnl Make Revenue
http://slidepdf.com/reader/full/pafi-10-mai-rodrigo-sepulveda-schulz-pnl-make-revenue 21/3921
8/6/2019 PAFI-10 mai-Rodrigo Sepulveda Schulz- Pnl Make Revenue
http://slidepdf.com/reader/full/pafi-10-mai-rodrigo-sepulveda-schulz-pnl-make-revenue 22/3922
8/6/2019 PAFI-10 mai-Rodrigo Sepulveda Schulz- Pnl Make Revenue
http://slidepdf.com/reader/full/pafi-10-mai-rodrigo-sepulveda-schulz-pnl-make-revenue 23/39
Sales: remember to focus on UNITS
• let’s be competitive, and check prices
from competition (sales-minus
approach, vs. cost-plus approach).
• Let’s build a business plan on a
14,99€ average price point
for T-shirts
• We can expand into segmentation of
products, of prices, etc. later.
23
8/6/2019 PAFI-10 mai-Rodrigo Sepulveda Schulz- Pnl Make Revenue
http://slidepdf.com/reader/full/pafi-10-mai-rodrigo-sepulveda-schulz-pnl-make-revenue 24/39
Sales : let’s assume I sell a few first per day, then
start increasing sales
• Assumptions :
• 4 T-shirts sold per day
• biz open online 24/7 = 30 days /month => 120 T-shirts/month
• 5% growth / month, but decreasing slowly to adjust for linear growth
• average price: 14,99€ (incl. VAT !)
(19.6% in France means 12,53€ excl. VAT) -
checked with market price/competition
24
8/6/2019 PAFI-10 mai-Rodrigo Sepulveda Schulz- Pnl Make Revenue
http://slidepdf.com/reader/full/pafi-10-mai-rodrigo-sepulveda-schulz-pnl-make-revenue 25/39
let’s first model Revenue - you can play with variables later:
such as discounts, promotions, and fluctuating demand per season
25
8/6/2019 PAFI-10 mai-Rodrigo Sepulveda Schulz- Pnl Make Revenue
http://slidepdf.com/reader/full/pafi-10-mai-rodrigo-sepulveda-schulz-pnl-make-revenue 26/39
2. COGS (direct costs)
• let’s assume a white T-shirt bought online from a supplier
• look for economies of scale
• don’t forget S&H (incl. here)
• your business plan
should be VAT-free.
Don’t add it, only for
Cash-Flow statements
• Make sure you order with
enough lead-time (1 month?)
26
8/6/2019 PAFI-10 mai-Rodrigo Sepulveda Schulz- Pnl Make Revenue
http://slidepdf.com/reader/full/pafi-10-mai-rodrigo-sepulveda-schulz-pnl-make-revenue 27/39
let’s now model direct costs - you can play with variables later :
white T-shirts + stickers + shipping
Gross margin has
to quickly become >0,
>50% is best
27
8/6/2019 PAFI-10 mai-Rodrigo Sepulveda Schulz- Pnl Make Revenue
http://slidepdf.com/reader/full/pafi-10-mai-rodrigo-sepulveda-schulz-pnl-make-revenue 28/39
3. Indirect costs
• assumptions ( t0 = launch of site, add as much HR+G&A for research before )
• sales & marketing : only Google Adwords SEM (assuming cost based on
conversion rates) + a launch budget for display (3 months).
• technology : using a hosted solution to start with :12€ /month
http://commander.1and1.fr/xml/order/Eshops
• HR : based on number of people to prepare and ship T-shirts + founder
(finance, marketing, etc.) - everything else outsourced (incl. as costs)
• G&A : rent, insurance, pro services, etc. assuming a fixed cost :
rent as soon as a hire (300€ /person), accountants, phone bills, etc.
28
8/6/2019 PAFI-10 mai-Rodrigo Sepulveda Schulz- Pnl Make Revenue
http://slidepdf.com/reader/full/pafi-10-mai-rodrigo-sepulveda-schulz-pnl-make-revenue 29/39
last, let’s model indirect costs - you can play with variables later :
Sales & marketing, technology, HR, G&A
29
8/6/2019 PAFI-10 mai-Rodrigo Sepulveda Schulz- Pnl Make Revenue
http://slidepdf.com/reader/full/pafi-10-mai-rodrigo-sepulveda-schulz-pnl-make-revenue 30/39
Now that your model is built : check for errors
use ‘track depencies’ to check formulas
I always use YELLOW for variables -
check them for likeliness
often use italic to indicate
a result of a formula
graphing an excel row (variable or result)
makes it easier to check validity
ps: beware of the last column of a model (doesn’t take into account the next period)
checking per period (quarter, year)
is useful + % sales
30
8/6/2019 PAFI-10 mai-Rodrigo Sepulveda Schulz- Pnl Make Revenue
http://slidepdf.com/reader/full/pafi-10-mai-rodrigo-sepulveda-schulz-pnl-make-revenue 31/39
good practices
• Put the hypothesis on each month (eg. growth) : it’s then very easy to adjust
for seasonal fluctuation, or acceleration of growth rate
• Always good to put reality checks in the excel sheet. you can always hide
them later. I put them in italic.
• always good to number each sections item, makes it very readable
• make sure you document every important cell or formula
• it’s best to put assumptions in a separate sheet afterwards.
31
8/6/2019 PAFI-10 mai-Rodrigo Sepulveda Schulz- Pnl Make Revenue
http://slidepdf.com/reader/full/pafi-10-mai-rodrigo-sepulveda-schulz-pnl-make-revenue 32/39
http://www.amazon.com/Financial-Modeling-Simon-Benninga/dp/0262026287/ref=sr_1_1?s=books&ie=UTF8&qid=1304957285&sr=1-1
Read more:
32
8/6/2019 PAFI-10 mai-Rodrigo Sepulveda Schulz- Pnl Make Revenue
http://slidepdf.com/reader/full/pafi-10-mai-rodrigo-sepulveda-schulz-pnl-make-revenue 33/39
3. Key Insights (KPIs)
33
8/6/2019 PAFI-10 mai-Rodrigo Sepulveda Schulz- Pnl Make Revenue
http://slidepdf.com/reader/full/pafi-10-mai-rodrigo-sepulveda-schulz-pnl-make-revenue 34/39
Break down analysis as %sales / year (~ per unit)
Helps understand breakdown of
costs, and efficiency potential
34
8/6/2019 PAFI-10 mai-Rodrigo Sepulveda Schulz- Pnl Make Revenue
http://slidepdf.com/reader/full/pafi-10-mai-rodrigo-sepulveda-schulz-pnl-make-revenue 35/39
Graphs (and values) show profit >0 ~ month 35...
35
8/6/2019 PAFI-10 mai-Rodrigo Sepulveda Schulz- Pnl Make Revenue
http://slidepdf.com/reader/full/pafi-10-mai-rodrigo-sepulveda-schulz-pnl-make-revenue 36/39
Changing variables allows to tweak & adjust
business model
Just changing price from 14,99€ to
18,99€ brings profitability at ~month 24
(1 year ahead). Volume to be adjusted.
will the offer be competitive and
attractive?
Changing sales volume from 4/day to
10/day brings profitability at ~month 23(1 year ahead). Price to be adjusted +
marketing expenditure.
Can you validate conversion rates
early enough, hence marketing
expenses and traction of offer ?
36
8/6/2019 PAFI-10 mai-Rodrigo Sepulveda Schulz- Pnl Make Revenue
http://slidepdf.com/reader/full/pafi-10-mai-rodrigo-sepulveda-schulz-pnl-make-revenue 37/39
Summary 1 : building a business model
• Build a model of your business : the algorithm first, with all relevant variables
• Make your spreadsheet easily readable, commented, well formatted : you’ll
use it to fine-tune your business, and to share with investors later on
• Don’t forget to double-check in all possible ways for errors
• Then, check that your variables are in a realistic range
• Finally, and only then, start testing different scenarios by just changing one
or two variables.
37
8/6/2019 PAFI-10 mai-Rodrigo Sepulveda Schulz- Pnl Make Revenue
http://slidepdf.com/reader/full/pafi-10-mai-rodrigo-sepulveda-schulz-pnl-make-revenue 38/39
Summary 2: key insights
• Breakdown in 100% of revenue of ONE unit of sales
• When are you profitable ? (in months?)
• How many units do you need to sell to be profitable ?
• Elasticity of variables (impact of each on target objective;
examples = profitability, market share, revenue milestone, etc.)
• In upcoming class on fundraising :
helps assess how much money you need to raise
38
8/6/2019 PAFI-10 mai-Rodrigo Sepulveda Schulz- Pnl Make Revenue
http://slidepdf.com/reader/full/pafi-10-mai-rodrigo-sepulveda-schulz-pnl-make-revenue 39/39
www.rodrigosepulveda.com
top related