Valithea’s financial plan was specifically developed for high-risk businesses, from pre-revenue startups to growth-stage companies.
With years of experience and testing on different business models, this financial model was engineered to:
* realistically project market size and penetration with top down approach TAM/SAM/SOM
* test all types of revenue models and easily switch between different scenarios
* display a changeable set of assumptions that entrepreneurs can update independently (training provided)
* measure liquidity
* integrate different feasibility analyses and make strategic decision
* present all necessary figures to investors, with presentation-ready tables and graphs
* link the financials to advanced valuation techniques and risk assessment that are defensible in negotiations.
The financial plan for startups and fast-growing SMEs is usually planned on a monthly basis, as measuring liquidity is important to correctly measure the amount of funding to raise, as well as to observe the changes in strategy closely and how they affect financials. This is recommended for companies that aim to raise a large amount of funds and quickly grow to raise Series A and B.
The financial plan includes:
- Editable assumptions page
- Customers development, usage rates and acquisition costs for customers and suppliers
- Detailed revenue model based on various identified unique revenue models and churn (services/ products, subscription fees for customers or suppliers, licence fees, transaction fees on sales, transaction fees on funding, inventory fees, advertising)
- Detailed direct and indirect costs (and inventory flow with value/volume and timing of payments)
- Personnel development based on growth and salary increase
- Integrated financials with P&L, balance sheet and monthly and yearly cash flows (and past financials analysis)
- Estimate of funds to raise that is automatic and measures minimum and maximum funds to raise, divided into multiples rounds
- Snapshot, Breakeven analysis, KPIs
- Template structured for automatic updates with graphs and table for use in reports, with changeable brand colours
The basic assumptions of the financial plan are determined on the cover page, as well as having an easy switch between Scenario 1 and 2 (for advanced financial plans).
The disclaimer cannot be deleted to ensure the fair use of the financial plan.
Most assumptions are determined on a single page for each scenario. This makes the financial plan fully flexible, as it can be updated anytime without changing any of the formulas contained in the projections. The image below has some hidden rows, but excel easily allows you to find the relevant assumptions, divided by market, marketing & sales, user behaviour, revenue model, direct costs, inventory, employees’ costs, opex, capex, working capital and funding assumptions. All pages can be expanded to show more details or minimised to show only basic information, for easier printing: additionally, the links take you straight to the relevant section you need to edit.
We use here a top down approach, by analysing market entry, market size, identifying customers to target, competition, competitiveness, growth strategy and retention. This produces highly realistic market penetration and growth built-up, slowly in the first months, and faster in the following years, with a later slowdown in each market (but growth can be sustained by entering new markets or selling new products to the same market. For a small business, instead, we bottom up approach is preferred. We estimate a TAM, SAM and SOM by assessing competition, and establish a maximum penetration and growth rate to ensure realistic growth. Additionally, we include a realistic number of suppliers or usage rates related to your customer data.
The financial plan can be seen on a monthly and yearly basis. Marketing and sales costs can be projected based on 4 main channels and conversion rates: this allows you to portray the funnel, measure and validate your Customer Acquisition Costs. It also helps many customers plan out marketing channels that they previously did not consider and to have realistic marketing expenses expectations . For example, you can plan the number of sales people needed to achieve certain goals.
The detailed revenue model allows to include a variety of products or services, subscriptions, licences, transaction fees or advertising revenues. Each revenue stream has a variety of assumptions that help determine realistically how much you can earn from the selected customer base. We also calculate detailed figures on which revenue figures are based: sales volumes on which transaction fees are based, website views on which advertising fees are based, etc.
Direct costs are measured for each revenue type, and the inventory flow as well as related costs can be calculated in detail, potentially also for different products if relevant for your liquidity planning. The financial plan provides many hints on costs that you may have forgotten.
Operating costs are calculated based on detailed projections of staff according to the strategy and realistic revenue/employees KPIs, salary for each position, and a variety of operating and administration costs, growing according to chosen variables, which ensure that no important business expense is left out.
Capex is typically low for startups, but it can include hardware for employees and intangible investments. This is calculated together with depreciation and balance sheet figures.
Rows and columns can be collapsed or expanded to easily find all relevant sections. The financial plans includes a high level of detail as you can see below, which was tested many times for potential errors. The complex formulas allows you to freely change the assumptions without ever needing to edit formulas. If you want to insert hard values, you can also do that.
The financial statements include a standard income statement with all relevant figures, a balance sheet and a cash flow statement with the direct approach to easily measure the timing of cash flows (both direct and indirect cash flow method available. This gives us information on the run rate, gross and net burn rate, breakeven profit and breakeven investment time (when present), as well as how much funds to raise.
The financial statements are viewable monthly or yearly, and rows can be collapsed or expanded to fit the tables perfectly into business plans.
We can also measure the upcoming round of funding by determining how many months it should cover, including a safety buffer to avoid being short of cash too early, before the next round of funding can take place. The amount of funds to raise automatically updates and flows into the balance sheet according to the period selected. This helps us select a financing strategy with multiple rounds when necessary.
Metrics can be both general and sector-specific, and give you a last overview of all key data on customers, product prices, revenue per customer group, breakeven analysis for each main product, and lifetime value of customers, among others.
At last, these tables and graphs update automatically, and are ready to be used for business plans or pitch decks. May graphs were correctly sized to fit into our documents. You can also change the colours of the spreadsheet to your brand colours, or copy paste the graphs into your branded power point: the colours will automatically adapt to your brand colours.
Get in contact if you want to discuss your strategy before purchasing:
You can also add the following analyses in excel:
- Valuation, fully integrated into the financial plan
- 2 in 1 Scenarios
- Financial KPIs, User Metrics monitoring
- Budgeting and Investor Dashboard
- Cap Table
- & more…