SlideShare ist ein Scribd-Unternehmen logo
1 von 28
Business & Financial Planning Workshop
              Jim Bailey
            September 2011
Agenda
  Introduction, Order of the Day and Objectives

  Financial Planning

  Key Performance Indicators

  Financial Statements
      Profit & Loss
      Balance Sheet
      Cashflow

  Valuation

  Q & A Session

  Closing / Feedback




                                                  Slide 2
Introduction
  LBS Alum – Corporate Finance

  Business and Strategic Planning for 20+ years

  Did work for Tech Hub client and suggested of high value
      Practical
      Things you can do today and everyday
      Generally your FD i th l t person you hi – b t shouldn’t b
      G       ll        is the last         hire but h ld ’t be




                                                                   Slide 3
Order of the Day
  Expectations on both sides
  Informal Setting
  Highly Interactive – Relate to your company situation
  Presentation and discussion on the 4 main concepts and tie that into
  models I’ve worked on to give examples
  Questions and Answers




                                                                    Slide 4
Objectives of the Workshop
  Provide tools you can take away and apply
  Give an appreciation of the financial issues and perspective
  Decide when to seek outside assistance – ST or PT Finance Director
  Understanding of terminology when you’re dealing with your
  accountant


  What I won’t talk about
     Financing – that’s a whole other session
     Strategy development – thi i about th fi
     St t     d     l      t this is b t the financial aspects only
                                                   i l      t    l




                                                                      Slide 5
Agenda
  Introduction, Order of the Day and Objectives

  Financial Planning

  Key Performance Indicators

  Financial Statements
       Profit & Loss
       Balance Sheet
       Cashflow

  Valuation

  Q & A Session

  Closing / Feedback




                                                  Slide 6
The Main Premise



     You can’t build the strategy without the financial plan

                              And

     You can’t build the financial plan without the strategy




                                                               Slide 7
The Financial Plan is integral to the BP
Section             Relevance of Financial Plan
Summary             • Amount of finance required and purpose
                    • Highlights of financial projections
The Market          • Size of market ‐ and by implication your share (an output!)
                    • Margins versus target segments (large versus small customers)
Competition         • Response of potential competitors to your plan (eg. pricing)
Marketing & Sales   • Detailed marketing plan: pricing and trends, discounts
                    • Customer service & support
Production and      • Sources of supply / costs and margins
Operations          • M k
                      Make or buy
                              b

Management          • Analysis of shareholdings, control
                    • Staff plans ‐ hiring, development & retention (option plans)


… and many other links as well


                                     Source: British Venture Capital Association: Business Plans & Financing Proposals


                                                                                                               Slide 8
The Process of Raising Finance
   85% of investment opportunities submitted to VC firms are rejected
   at a very early stage; serious consideration given to 15%;
   negotiation stage is only reached by 5%

   Decision to proceed beyond an initial reading will depend on the
   quality of the Business Plan

   Any subsequent examination of the business by the investor will
   take as its starting point the contents of a well structured and written
   plan

   The Business Plan is the first, and often best, chance for
   management to impress investors




                               Source: British Venture Capital Association: Business Plans & Financing Proposals


                                                                                                         Slide 9
How long should the planning horizon be?
  3 - 5 years (1st year b month)
                        by   th)
  Generally would like to get to a point where the business is established
  / mature
  Technically the length of forecast period should be equal to the length
  of time management expects new investment rates of return to exceed
  the cost of capital - known as extraordinary returns (accuracy is not
  determinant), considering the following:
      Proprietary technologies
      Patented products
      Product lifecycles
      Established brands




                                 Source: British Venture Capital Association: Business Plans & Financing Proposals

                                                                                                          Slide 10
Length of Forecast Period
          Forces Driving Industry Competitiveness

                     Potential Entrants




                    Industry Rivalry /
  Suppliers           Competition                   Buyers
                                                      y




                        Substitutes


                                                             Slide 11
Agenda

  Introduction, Order of the Day and Objectives

  Financial Planning

  Key Performance Indicators (KPIs)

  Financial Statements
       Profit & Loss
       Balance Sheet
       Cashflow

  Valuation

  Q & A Session

  Closing / Feedback




                                                  Slide 12
Key Performance Indicators (KPIs)
  Main drivers of value

  Indicators of how the business is performing

  Things you can touch and feel – customers, expenses

  Main issues you should manage in the business

  Maintain a “dashboard” to monitor regularly




                                                        Slide 13
KPIs and Forecasting: How low can you go?

                           Revenue



      # of Customers                        Rev / Customer



  Prepaid       Postpaid                 Initial              Recurring


                                                          Fixed       Usage
                                                         Charge



                               Pricing             Discount




                                                                          Slide 14
Understanding Cost Structures
  How do costs react to changes in sales volume?

  Fixed versus variable costs
    Easy to change in a short period of time or adjusts with revenue
    Tie into revenue forecast in some way

  Make or buy decisions

                 6,000 

                 5,000 

                 4,000             Outsourced
                 3,000             Internal

                 2,000 
                 2 000

                 1,000 

                    ‐
                          Year 1   Year 2   Year 3   Year 4   Year 5   Year 6

                                                                                Slide 15
Considerations in Plan Development
 Its a spreadsheet, not the business

 Costs can usually be predicted with 100% accuracy, not revenues
     Spend ti
     S   d time on th revenues and understanding th
                   the           d d t di these
     Re-visit cost assumptions as they relate to those revenues, especially as
     actual results are available

 The f
     financial plan is a live tool




                                                                                 Slide 16
Benchmarking to arrive at final year metrics
  Find companies in similar business

  Generally public company financials – adjust for costs of being public,
  size,
  size etc

  Other industry sources - informal

  Combine with sensitivity analysis




                                                                    Slide 17
Sensitivity Analysis
 Involves adjusting key assumptions to assess impacts on:
     Cash Needs
     Valuation

 Realistic, optimistic and pessimistic views for each parameter

 Helps to understand risks and develop plans to mitigate these

 Helps to identify key value drivers and focus management attention and
 resources

 There are tools to help perform this analysis – including probabilities




                                                                     Slide 18
Scenario Planning
 Usually in complex situations

 Link assumptions so that mutually exclusive options are not
 considered

 Identify interdependencies in the Business Plan – revenues go down,
 costs should go down, etc.




                                                                 Slide 19
Agenda
  Introduction, Order of the Day and Objectives

  Financial Planning

  Key Performance Indicators (KPIs)

  Financial Statements
       Profit & Loss
       Balance Sheet
       Cashflow

  Valuation

  Q & A Session

  Closing / Feedback




                                                  Slide 20
Financial Statements

  Profit & Loss
  – represents a period of time; flows
      p          p             ;
  Balance Sheet
  – represents a point in time; snapshot
      p          p            ;    p
  Statement of Cashflows
  – sources and uses of cash




                                           Slide 21
Profit & Loss
   Turnover or Revenue
   Cost of Sales or Cost of Goods Sold
   Operating Expenses
   EBITDA – Earnings Before Interest, Tax, Depreciation and Amortization –
   Operating Cashflow
   Depreciation & Amortization
   PBIT / EBIT or Operating Profit
   Interest
   PBT or EBT
   Taxes
   T
   PAT or Net Income



                                                                     Slide 22
Balance Sheet
Fixed Assets
     Tangible Assets
     Intangible Assets (Patents, Start up costs)
Current Assets
     Stocks / Inventory
     Debtors / Accounts Receivable
     Cash at bank and in hand
Current Liabilities / Creditors
     Amounts falling due within one year
Net Current Assets
Total Assets less Current Liabilities
Long Term Liabilities / Creditors
 o g e       ab t es C ed to s
     Amounts falling due after more than one year
Net Assets

Share Capital
     Equity
     Profit & Loss Account
Shareholders Funds



                                                    Slide 23
Financial Ratios
Performance Analysis
     Gross Profit – Sales minus Cost of Sales
     Gross Margin % - Gross Profit / Sales
     Net Margin – Operating Profit / Sales
     Capital Employed – Equity + Debt (Long & Short Term)
     Return on Capital Employed – EBIT or PBIT / Capital Employed
     Stock Days – Stock / Cost of Sales * 365
     Debtor Days – Trade Debtors / Sales * 365
     Creditor Days – Trade Creditors / Sales * 365

Capital Structure Ratios
     Gearing – Debt / Capital Employed
     Interest Cover – PBIT or EBITDA / Interest Payable

Liquidity Ratios
     Current Ratio – Current Assets / Current Liabilities
     “Acid Test” – Current Assets less Stock / Current Liabilities

Other
     Turnover per Employee
     Turnover per Marketing Campaign
     Customer Acquisition Costs
     New Sales or Customers per Sales Person
     Overhead Costs per Employee


                                                                     Slide 24
Cashflow / Sources & Uses of Cash
Cash from Operating Activities
     Net Income
     Add Back: Non cash items such as depreciation
     Changes in working capital (Stocks, Debtors, Creditors)
     Ch       i    ki      it l (St k D bt        C dit )

Cash from Investing Activities
     Capital Investment – Tangible Assets
     Capital In estment – Intangible Assets
             Investment

Cash from Financing Activities
     Increase (Decrease) in short term borrowings
     Increase (Decrease) in long term borrowings
     Increase (Decrease) in shareholders loans
     Increase (Decrease) in equity

Increase (Decrease) in Cash

Opening Cash Balance
Closing Cash Balance



                                                               Slide 25
The Scary Concept of Working capital




                                       Slide 26
Agenda

  Introduction, Order of the Day and Objectives

  Financial Planning

  Key Performance Indicators (KPIs)

  Financial Statements
       Profit & Loss
       Balance Sheet
       Cashflow

  Valuation

  Q & A Session

  Closing / Feedback




                                                  Slide 27
Agenda
  Introduction,
  Introduction Order of the Day and Objectives

  Financial Planning

  Key Performance Indicators (KPIs)

  Financial Statements
      Profit & Loss
      Balance Sheet
      Cashflow

  Valuation

  Q & A Session

  Closing Feedback
  Cl i / F db k




                                                 Slide 28

Weitere ähnliche Inhalte

Was ist angesagt?

Financial plan and controll entrepreneurship
Financial plan and controll entrepreneurshipFinancial plan and controll entrepreneurship
Financial plan and controll entrepreneurshipfatimanajam4
 
Strategic financial management report (AC)
Strategic financial management report (AC)Strategic financial management report (AC)
Strategic financial management report (AC)AAScott
 
Green book guidance_short_plain_english_guide_to_assessing_business_cases
Green book guidance_short_plain_english_guide_to_assessing_business_casesGreen book guidance_short_plain_english_guide_to_assessing_business_cases
Green book guidance_short_plain_english_guide_to_assessing_business_casestmelnik
 
Publication_ Six Questions on the Path to Financially Justified Projects
Publication_ Six Questions on the Path to Financially Justified ProjectsPublication_ Six Questions on the Path to Financially Justified Projects
Publication_ Six Questions on the Path to Financially Justified ProjectsBill Kay, MSOL, PMP
 
CA Final - Strategic financial management
CA Final - Strategic financial managementCA Final - Strategic financial management
CA Final - Strategic financial managementShubham Agrawal
 
Cash Management Strategies During Economic Turmoil Aicpa
Cash Management Strategies During Economic Turmoil AicpaCash Management Strategies During Economic Turmoil Aicpa
Cash Management Strategies During Economic Turmoil Aicpaguest8f464d
 
Basics of Financial Management for Non Finance Executives - Part 1
Basics of Financial Management for Non Finance Executives - Part 1Basics of Financial Management for Non Finance Executives - Part 1
Basics of Financial Management for Non Finance Executives - Part 1SChakrabarti
 
Finance for the Non-Finance Manager
Finance for the Non-Finance ManagerFinance for the Non-Finance Manager
Finance for the Non-Finance ManagerPYA, P.C.
 
Cracking the Nest Egg: When Accumulation Becomes Distribution
Cracking the Nest Egg: When Accumulation Becomes DistributionCracking the Nest Egg: When Accumulation Becomes Distribution
Cracking the Nest Egg: When Accumulation Becomes DistributionForman Bay LLC
 
Goldman sachs conference_9june2011
Goldman sachs conference_9june2011Goldman sachs conference_9june2011
Goldman sachs conference_9june2011carlolinkedin
 
Cracking The Nest Egg: When Accumulation Becomes Distribution
Cracking The Nest Egg: When Accumulation Becomes DistributionCracking The Nest Egg: When Accumulation Becomes Distribution
Cracking The Nest Egg: When Accumulation Becomes DistributionJGreene Financial
 
Tugas AKMEN II (jeany christiana 1642040)
Tugas AKMEN II (jeany christiana 1642040)Tugas AKMEN II (jeany christiana 1642040)
Tugas AKMEN II (jeany christiana 1642040)JennyChristiana
 
Strategic financial management
Strategic financial managementStrategic financial management
Strategic financial managementShaikh Abdulsaeed
 
Unit 3 chapter 2
Unit 3 chapter   2Unit 3 chapter   2
Unit 3 chapter 2neelakshi81
 

Was ist angesagt? (18)

Financial plan and controll entrepreneurship
Financial plan and controll entrepreneurshipFinancial plan and controll entrepreneurship
Financial plan and controll entrepreneurship
 
Strategic financial management report (AC)
Strategic financial management report (AC)Strategic financial management report (AC)
Strategic financial management report (AC)
 
Green book guidance_short_plain_english_guide_to_assessing_business_cases
Green book guidance_short_plain_english_guide_to_assessing_business_casesGreen book guidance_short_plain_english_guide_to_assessing_business_cases
Green book guidance_short_plain_english_guide_to_assessing_business_cases
 
Publication_ Six Questions on the Path to Financially Justified Projects
Publication_ Six Questions on the Path to Financially Justified ProjectsPublication_ Six Questions on the Path to Financially Justified Projects
Publication_ Six Questions on the Path to Financially Justified Projects
 
CA Final - Strategic financial management
CA Final - Strategic financial managementCA Final - Strategic financial management
CA Final - Strategic financial management
 
Financial Tips for Survival
Financial Tips for SurvivalFinancial Tips for Survival
Financial Tips for Survival
 
Cash Management Strategies During Economic Turmoil Aicpa
Cash Management Strategies During Economic Turmoil AicpaCash Management Strategies During Economic Turmoil Aicpa
Cash Management Strategies During Economic Turmoil Aicpa
 
Basics of Financial Management for Non Finance Executives - Part 1
Basics of Financial Management for Non Finance Executives - Part 1Basics of Financial Management for Non Finance Executives - Part 1
Basics of Financial Management for Non Finance Executives - Part 1
 
Financial Reporting Done Right
Financial Reporting Done RightFinancial Reporting Done Right
Financial Reporting Done Right
 
Finance for the Non-Finance Manager
Finance for the Non-Finance ManagerFinance for the Non-Finance Manager
Finance for the Non-Finance Manager
 
Cracking the Nest Egg: When Accumulation Becomes Distribution
Cracking the Nest Egg: When Accumulation Becomes DistributionCracking the Nest Egg: When Accumulation Becomes Distribution
Cracking the Nest Egg: When Accumulation Becomes Distribution
 
Goldman sachs conference_9june2011
Goldman sachs conference_9june2011Goldman sachs conference_9june2011
Goldman sachs conference_9june2011
 
Cracking The Nest Egg: When Accumulation Becomes Distribution
Cracking The Nest Egg: When Accumulation Becomes DistributionCracking The Nest Egg: When Accumulation Becomes Distribution
Cracking The Nest Egg: When Accumulation Becomes Distribution
 
Tugas AKMEN II (jeany christiana 1642040)
Tugas AKMEN II (jeany christiana 1642040)Tugas AKMEN II (jeany christiana 1642040)
Tugas AKMEN II (jeany christiana 1642040)
 
Strategic financial management
Strategic financial managementStrategic financial management
Strategic financial management
 
Unit 3 chapter 2
Unit 3 chapter   2Unit 3 chapter   2
Unit 3 chapter 2
 
Mefa UNIT VI CAPITAL BUDGETING
Mefa UNIT VI CAPITAL BUDGETINGMefa UNIT VI CAPITAL BUDGETING
Mefa UNIT VI CAPITAL BUDGETING
 
The Ten Day Plan
The Ten Day PlanThe Ten Day Plan
The Ten Day Plan
 

Andere mochten auch

Quick Guide Movie Facts by JananasGold.com
Quick Guide Movie Facts by JananasGold.comQuick Guide Movie Facts by JananasGold.com
Quick Guide Movie Facts by JananasGold.comMichael Weberberger
 
Omni Retail - Microsoft Dynamics
Omni Retail - Microsoft DynamicsOmni Retail - Microsoft Dynamics
Omni Retail - Microsoft DynamicsIT Soluciones
 
Sistem otot pada non ikan
Sistem otot pada non ikanSistem otot pada non ikan
Sistem otot pada non ikanAlfarico Rico
 
Physics and astronomy careers 2011
Physics and astronomy careers 2011Physics and astronomy careers 2011
Physics and astronomy careers 2011st-andrewscareers
 
Agcas Biennial programme 2012
Agcas Biennial programme 2012Agcas Biennial programme 2012
Agcas Biennial programme 2012st-andrewscareers
 
Sistem osmoregulasi pada kepiting dan udang
Sistem osmoregulasi pada kepiting dan udangSistem osmoregulasi pada kepiting dan udang
Sistem osmoregulasi pada kepiting dan udangAlfarico Rico
 
Daur hidup ikan lele by yazid alfa riko
Daur hidup ikan lele by yazid alfa rikoDaur hidup ikan lele by yazid alfa riko
Daur hidup ikan lele by yazid alfa rikoAlfarico Rico
 
Pembenihan lobster air tawar
Pembenihan lobster air tawarPembenihan lobster air tawar
Pembenihan lobster air tawarAlfarico Rico
 
Directiva 28 normas-finalizacion-2016-dreapurimac
Directiva 28 normas-finalizacion-2016-dreapurimacDirectiva 28 normas-finalizacion-2016-dreapurimac
Directiva 28 normas-finalizacion-2016-dreapurimacSulio Chacón Yauris
 
Indeks pembangunan manusia
Indeks pembangunan manusiaIndeks pembangunan manusia
Indeks pembangunan manusiasmileisfa
 
Teknik Pembenihan Ikan Patin
Teknik Pembenihan Ikan PatinTeknik Pembenihan Ikan Patin
Teknik Pembenihan Ikan PatinAlfarico Rico
 
RBS Change - e-commerce international
RBS Change - e-commerce internationalRBS Change - e-commerce international
RBS Change - e-commerce internationalrbschange
 
Conception Web Avec Dreamweaver
Conception Web Avec DreamweaverConception Web Avec Dreamweaver
Conception Web Avec Dreamweaverdavidbx
 
CES 2013 - deébriefing du salon par Bernard Neumeister
CES 2013 - deébriefing du salon par Bernard NeumeisterCES 2013 - deébriefing du salon par Bernard Neumeister
CES 2013 - deébriefing du salon par Bernard Neumeisterknechlaurence
 
Le web, la gestion de projet web et la communication web 2.0
Le web, la gestion de projet web et la communication web 2.0Le web, la gestion de projet web et la communication web 2.0
Le web, la gestion de projet web et la communication web 2.0Marion Castel
 

Andere mochten auch (20)

Quick Guide Movie Facts by JananasGold.com
Quick Guide Movie Facts by JananasGold.comQuick Guide Movie Facts by JananasGold.com
Quick Guide Movie Facts by JananasGold.com
 
Omni Retail - Microsoft Dynamics
Omni Retail - Microsoft DynamicsOmni Retail - Microsoft Dynamics
Omni Retail - Microsoft Dynamics
 
Abcl ppt final
Abcl ppt finalAbcl ppt final
Abcl ppt final
 
Quick Guide Google Tips
Quick Guide Google TipsQuick Guide Google Tips
Quick Guide Google Tips
 
Memahami islam
Memahami islamMemahami islam
Memahami islam
 
Chrysophyta
ChrysophytaChrysophyta
Chrysophyta
 
Sistem otot pada non ikan
Sistem otot pada non ikanSistem otot pada non ikan
Sistem otot pada non ikan
 
Terumbu karang
Terumbu karangTerumbu karang
Terumbu karang
 
Physics and astronomy careers 2011
Physics and astronomy careers 2011Physics and astronomy careers 2011
Physics and astronomy careers 2011
 
Agcas Biennial programme 2012
Agcas Biennial programme 2012Agcas Biennial programme 2012
Agcas Biennial programme 2012
 
Sistem osmoregulasi pada kepiting dan udang
Sistem osmoregulasi pada kepiting dan udangSistem osmoregulasi pada kepiting dan udang
Sistem osmoregulasi pada kepiting dan udang
 
Daur hidup ikan lele by yazid alfa riko
Daur hidup ikan lele by yazid alfa rikoDaur hidup ikan lele by yazid alfa riko
Daur hidup ikan lele by yazid alfa riko
 
Pembenihan lobster air tawar
Pembenihan lobster air tawarPembenihan lobster air tawar
Pembenihan lobster air tawar
 
Directiva 28 normas-finalizacion-2016-dreapurimac
Directiva 28 normas-finalizacion-2016-dreapurimacDirectiva 28 normas-finalizacion-2016-dreapurimac
Directiva 28 normas-finalizacion-2016-dreapurimac
 
Indeks pembangunan manusia
Indeks pembangunan manusiaIndeks pembangunan manusia
Indeks pembangunan manusia
 
Teknik Pembenihan Ikan Patin
Teknik Pembenihan Ikan PatinTeknik Pembenihan Ikan Patin
Teknik Pembenihan Ikan Patin
 
RBS Change - e-commerce international
RBS Change - e-commerce internationalRBS Change - e-commerce international
RBS Change - e-commerce international
 
Conception Web Avec Dreamweaver
Conception Web Avec DreamweaverConception Web Avec Dreamweaver
Conception Web Avec Dreamweaver
 
CES 2013 - deébriefing du salon par Bernard Neumeister
CES 2013 - deébriefing du salon par Bernard NeumeisterCES 2013 - deébriefing du salon par Bernard Neumeister
CES 2013 - deébriefing du salon par Bernard Neumeister
 
Le web, la gestion de projet web et la communication web 2.0
Le web, la gestion de projet web et la communication web 2.0Le web, la gestion de projet web et la communication web 2.0
Le web, la gestion de projet web et la communication web 2.0
 

Ähnlich wie Tech Hub Financial Planning Workshop

M8 - Setting up finance function irrespective of the size of the business
M8 - Setting up finance function irrespective of the size of the business M8 - Setting up finance function irrespective of the size of the business
M8 - Setting up finance function irrespective of the size of the business Precious Mvulane CA (SA),RA
 
Financial Modeling Services Mcg
Financial Modeling Services McgFinancial Modeling Services Mcg
Financial Modeling Services Mcgvikastar
 
The KPI - Cash Flow Modeling and Projections (Series: MBA Boot Camp 2020)
The KPI - Cash Flow Modeling and Projections (Series: MBA Boot Camp 2020)   The KPI - Cash Flow Modeling and Projections (Series: MBA Boot Camp 2020)
The KPI - Cash Flow Modeling and Projections (Series: MBA Boot Camp 2020) Financial Poise
 
Financial Modelling
Financial Modelling Financial Modelling
Financial Modelling Tapan Das
 
The KPI - Cash Flow Modeling and Projections (Series: MBA Boot Camp)
The KPI - Cash Flow Modeling and Projections (Series: MBA Boot Camp)The KPI - Cash Flow Modeling and Projections (Series: MBA Boot Camp)
The KPI - Cash Flow Modeling and Projections (Series: MBA Boot Camp)Financial Poise
 
Writing a businessplan
Writing a businessplanWriting a businessplan
Writing a businessplanKapil Chhabra
 
Steve Calder: Business Benefits of GIS: An ROI Approach
Steve Calder: Business Benefits of GIS: An ROI ApproachSteve Calder: Business Benefits of GIS: An ROI Approach
Steve Calder: Business Benefits of GIS: An ROI ApproachAGI Geocommunity
 
S&Op Training
S&Op TrainingS&Op Training
S&Op TrainingWajihuddin
 
Finance for non finance
Finance for non financeFinance for non finance
Finance for non financeJai Sethi
 
EBITDA and Other Scary Words (Series: MBA Boot Camp 2020)
EBITDA and Other Scary Words (Series: MBA Boot Camp 2020)   EBITDA and Other Scary Words (Series: MBA Boot Camp 2020)
EBITDA and Other Scary Words (Series: MBA Boot Camp 2020) Financial Poise
 
The KPI - Cash Flow Modeling and Projections (Series: MBA in a Day)
The KPI - Cash Flow Modeling and Projections (Series: MBA in a Day)The KPI - Cash Flow Modeling and Projections (Series: MBA in a Day)
The KPI - Cash Flow Modeling and Projections (Series: MBA in a Day)Financial Poise
 
Financial realities to strategy (public)
Financial realities to strategy (public)Financial realities to strategy (public)
Financial realities to strategy (public)ParCon Consulting, LLC
 
Manajemen keuangan.lecture 4 min
Manajemen keuangan.lecture 4 minManajemen keuangan.lecture 4 min
Manajemen keuangan.lecture 4 minstanspmb
 
20130519 第3回valuation勉強会
20130519 第3回valuation勉強会20130519 第3回valuation勉強会
20130519 第3回valuation勉強会FED事務局
 
Building a business plan
Building a business planBuilding a business plan
Building a business planryant manurung
 

Ähnlich wie Tech Hub Financial Planning Workshop (20)

Rome
RomeRome
Rome
 
M8 - Setting up finance function irrespective of the size of the business
M8 - Setting up finance function irrespective of the size of the business M8 - Setting up finance function irrespective of the size of the business
M8 - Setting up finance function irrespective of the size of the business
 
Capital
CapitalCapital
Capital
 
Financial Modeling Services Mcg
Financial Modeling Services McgFinancial Modeling Services Mcg
Financial Modeling Services Mcg
 
The KPI - Cash Flow Modeling and Projections (Series: MBA Boot Camp 2020)
The KPI - Cash Flow Modeling and Projections (Series: MBA Boot Camp 2020)   The KPI - Cash Flow Modeling and Projections (Series: MBA Boot Camp 2020)
The KPI - Cash Flow Modeling and Projections (Series: MBA Boot Camp 2020)
 
Business Case Development Framework
Business Case Development FrameworkBusiness Case Development Framework
Business Case Development Framework
 
Financial Modelling
Financial Modelling Financial Modelling
Financial Modelling
 
The KPI - Cash Flow Modeling and Projections (Series: MBA Boot Camp)
The KPI - Cash Flow Modeling and Projections (Series: MBA Boot Camp)The KPI - Cash Flow Modeling and Projections (Series: MBA Boot Camp)
The KPI - Cash Flow Modeling and Projections (Series: MBA Boot Camp)
 
Writing a businessplan
Writing a businessplanWriting a businessplan
Writing a businessplan
 
Steve Calder: Business Benefits of GIS: An ROI Approach
Steve Calder: Business Benefits of GIS: An ROI ApproachSteve Calder: Business Benefits of GIS: An ROI Approach
Steve Calder: Business Benefits of GIS: An ROI Approach
 
S&Op Training
S&Op TrainingS&Op Training
S&Op Training
 
Finance for non finance
Finance for non financeFinance for non finance
Finance for non finance
 
EBITDA and Other Scary Words (Series: MBA Boot Camp 2020)
EBITDA and Other Scary Words (Series: MBA Boot Camp 2020)   EBITDA and Other Scary Words (Series: MBA Boot Camp 2020)
EBITDA and Other Scary Words (Series: MBA Boot Camp 2020)
 
The KPI - Cash Flow Modeling and Projections (Series: MBA in a Day)
The KPI - Cash Flow Modeling and Projections (Series: MBA in a Day)The KPI - Cash Flow Modeling and Projections (Series: MBA in a Day)
The KPI - Cash Flow Modeling and Projections (Series: MBA in a Day)
 
Financial realities to strategy (public)
Financial realities to strategy (public)Financial realities to strategy (public)
Financial realities to strategy (public)
 
Manajemen keuangan.lecture 4 min
Manajemen keuangan.lecture 4 minManajemen keuangan.lecture 4 min
Manajemen keuangan.lecture 4 min
 
20130519 第3回valuation勉強会
20130519 第3回valuation勉強会20130519 第3回valuation勉強会
20130519 第3回valuation勉強会
 
Module 4
Module 4Module 4
Module 4
 
Building a business plan
Building a business planBuilding a business plan
Building a business plan
 
12
1212
12
 

Tech Hub Financial Planning Workshop

  • 1. Business & Financial Planning Workshop Jim Bailey September 2011
  • 2. Agenda Introduction, Order of the Day and Objectives Financial Planning Key Performance Indicators Financial Statements Profit & Loss Balance Sheet Cashflow Valuation Q & A Session Closing / Feedback Slide 2
  • 3. Introduction LBS Alum – Corporate Finance Business and Strategic Planning for 20+ years Did work for Tech Hub client and suggested of high value Practical Things you can do today and everyday Generally your FD i th l t person you hi – b t shouldn’t b G ll is the last hire but h ld ’t be Slide 3
  • 4. Order of the Day Expectations on both sides Informal Setting Highly Interactive – Relate to your company situation Presentation and discussion on the 4 main concepts and tie that into models I’ve worked on to give examples Questions and Answers Slide 4
  • 5. Objectives of the Workshop Provide tools you can take away and apply Give an appreciation of the financial issues and perspective Decide when to seek outside assistance – ST or PT Finance Director Understanding of terminology when you’re dealing with your accountant What I won’t talk about Financing – that’s a whole other session Strategy development – thi i about th fi St t d l t this is b t the financial aspects only i l t l Slide 5
  • 6. Agenda Introduction, Order of the Day and Objectives Financial Planning Key Performance Indicators Financial Statements Profit & Loss Balance Sheet Cashflow Valuation Q & A Session Closing / Feedback Slide 6
  • 7. The Main Premise You can’t build the strategy without the financial plan And You can’t build the financial plan without the strategy Slide 7
  • 8. The Financial Plan is integral to the BP Section Relevance of Financial Plan Summary • Amount of finance required and purpose • Highlights of financial projections The Market • Size of market ‐ and by implication your share (an output!) • Margins versus target segments (large versus small customers) Competition • Response of potential competitors to your plan (eg. pricing) Marketing & Sales • Detailed marketing plan: pricing and trends, discounts • Customer service & support Production and  • Sources of supply / costs and margins Operations • M k Make or buy b Management • Analysis of shareholdings, control • Staff plans ‐ hiring, development & retention (option plans) … and many other links as well Source: British Venture Capital Association: Business Plans & Financing Proposals Slide 8
  • 9. The Process of Raising Finance 85% of investment opportunities submitted to VC firms are rejected at a very early stage; serious consideration given to 15%; negotiation stage is only reached by 5% Decision to proceed beyond an initial reading will depend on the quality of the Business Plan Any subsequent examination of the business by the investor will take as its starting point the contents of a well structured and written plan The Business Plan is the first, and often best, chance for management to impress investors Source: British Venture Capital Association: Business Plans & Financing Proposals Slide 9
  • 10. How long should the planning horizon be? 3 - 5 years (1st year b month) by th) Generally would like to get to a point where the business is established / mature Technically the length of forecast period should be equal to the length of time management expects new investment rates of return to exceed the cost of capital - known as extraordinary returns (accuracy is not determinant), considering the following: Proprietary technologies Patented products Product lifecycles Established brands Source: British Venture Capital Association: Business Plans & Financing Proposals Slide 10
  • 11. Length of Forecast Period Forces Driving Industry Competitiveness Potential Entrants Industry Rivalry / Suppliers Competition Buyers y Substitutes Slide 11
  • 12. Agenda Introduction, Order of the Day and Objectives Financial Planning Key Performance Indicators (KPIs) Financial Statements Profit & Loss Balance Sheet Cashflow Valuation Q & A Session Closing / Feedback Slide 12
  • 13. Key Performance Indicators (KPIs) Main drivers of value Indicators of how the business is performing Things you can touch and feel – customers, expenses Main issues you should manage in the business Maintain a “dashboard” to monitor regularly Slide 13
  • 14. KPIs and Forecasting: How low can you go? Revenue # of Customers Rev / Customer Prepaid Postpaid Initial Recurring Fixed Usage Charge Pricing Discount Slide 14
  • 15. Understanding Cost Structures How do costs react to changes in sales volume? Fixed versus variable costs Easy to change in a short period of time or adjusts with revenue Tie into revenue forecast in some way Make or buy decisions 6,000  5,000  4,000  Outsourced 3,000  Internal 2,000  2 000 1,000  ‐ Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Slide 15
  • 16. Considerations in Plan Development Its a spreadsheet, not the business Costs can usually be predicted with 100% accuracy, not revenues Spend ti S d time on th revenues and understanding th the d d t di these Re-visit cost assumptions as they relate to those revenues, especially as actual results are available The f financial plan is a live tool Slide 16
  • 17. Benchmarking to arrive at final year metrics Find companies in similar business Generally public company financials – adjust for costs of being public, size, size etc Other industry sources - informal Combine with sensitivity analysis Slide 17
  • 18. Sensitivity Analysis Involves adjusting key assumptions to assess impacts on: Cash Needs Valuation Realistic, optimistic and pessimistic views for each parameter Helps to understand risks and develop plans to mitigate these Helps to identify key value drivers and focus management attention and resources There are tools to help perform this analysis – including probabilities Slide 18
  • 19. Scenario Planning Usually in complex situations Link assumptions so that mutually exclusive options are not considered Identify interdependencies in the Business Plan – revenues go down, costs should go down, etc. Slide 19
  • 20. Agenda Introduction, Order of the Day and Objectives Financial Planning Key Performance Indicators (KPIs) Financial Statements Profit & Loss Balance Sheet Cashflow Valuation Q & A Session Closing / Feedback Slide 20
  • 21. Financial Statements Profit & Loss – represents a period of time; flows p p ; Balance Sheet – represents a point in time; snapshot p p ; p Statement of Cashflows – sources and uses of cash Slide 21
  • 22. Profit & Loss Turnover or Revenue Cost of Sales or Cost of Goods Sold Operating Expenses EBITDA – Earnings Before Interest, Tax, Depreciation and Amortization – Operating Cashflow Depreciation & Amortization PBIT / EBIT or Operating Profit Interest PBT or EBT Taxes T PAT or Net Income Slide 22
  • 23. Balance Sheet Fixed Assets Tangible Assets Intangible Assets (Patents, Start up costs) Current Assets Stocks / Inventory Debtors / Accounts Receivable Cash at bank and in hand Current Liabilities / Creditors Amounts falling due within one year Net Current Assets Total Assets less Current Liabilities Long Term Liabilities / Creditors o g e ab t es C ed to s Amounts falling due after more than one year Net Assets Share Capital Equity Profit & Loss Account Shareholders Funds Slide 23
  • 24. Financial Ratios Performance Analysis Gross Profit – Sales minus Cost of Sales Gross Margin % - Gross Profit / Sales Net Margin – Operating Profit / Sales Capital Employed – Equity + Debt (Long & Short Term) Return on Capital Employed – EBIT or PBIT / Capital Employed Stock Days – Stock / Cost of Sales * 365 Debtor Days – Trade Debtors / Sales * 365 Creditor Days – Trade Creditors / Sales * 365 Capital Structure Ratios Gearing – Debt / Capital Employed Interest Cover – PBIT or EBITDA / Interest Payable Liquidity Ratios Current Ratio – Current Assets / Current Liabilities “Acid Test” – Current Assets less Stock / Current Liabilities Other Turnover per Employee Turnover per Marketing Campaign Customer Acquisition Costs New Sales or Customers per Sales Person Overhead Costs per Employee Slide 24
  • 25. Cashflow / Sources & Uses of Cash Cash from Operating Activities Net Income Add Back: Non cash items such as depreciation Changes in working capital (Stocks, Debtors, Creditors) Ch i ki it l (St k D bt C dit ) Cash from Investing Activities Capital Investment – Tangible Assets Capital In estment – Intangible Assets Investment Cash from Financing Activities Increase (Decrease) in short term borrowings Increase (Decrease) in long term borrowings Increase (Decrease) in shareholders loans Increase (Decrease) in equity Increase (Decrease) in Cash Opening Cash Balance Closing Cash Balance Slide 25
  • 26. The Scary Concept of Working capital Slide 26
  • 27. Agenda Introduction, Order of the Day and Objectives Financial Planning Key Performance Indicators (KPIs) Financial Statements Profit & Loss Balance Sheet Cashflow Valuation Q & A Session Closing / Feedback Slide 27
  • 28. Agenda Introduction, Introduction Order of the Day and Objectives Financial Planning Key Performance Indicators (KPIs) Financial Statements Profit & Loss Balance Sheet Cashflow Valuation Q & A Session Closing Feedback Cl i / F db k Slide 28