budgeting & forecasting - predicting the outcome

Budge&ng & Forecas&ng Predic'ng the outcome Author: Eva Hukshorn

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EFactor: An introduc'on

•  Founders Adrie Reinders, Marion Freijsen, Roeland Reinders •  Started OHM Inc. in 2004: Business Development for Fortune 2000 •  Serving (mainly) technology companies around the globe •  Goal: assist emerging technology companies in selling their product to Corporates •  In 2007 they wrote a book: The N-‐Factor

-  How efficient networking can change the dynamics of your business -  Huge success: no theory, but hands-‐on 'ps & tricks

•  Result: EFactor -‐ a social plaUorm for entrepreneurs -  Strategic business networking impacts the future of your business -  Goal: share knowledge, increase sales, decrease costs, find capital -  Mission: increase success of entrepreneurs to start-‐up or accelerate their organiza'on

-  In 2012 the new book was launched: The E-‐Factor: Entrepreneurship in the Social Media Age

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EFACTOR, THE WORLD’S LARGEST ONLINE NETWORK FOR ENTREPRENEURS ON EARTH

An online community offering you a network, knowledge, events, and every business resources you need to

succeed

Eva Hukshorn: An introduc'on

•  Work Experience -  Current: Partner EFactor

Board of Advisory: TreFoil Energy / CleanDrinks / Global Thinkers / ShowLinq

Coach Startup: Bootcamp Amsterdam / New Venture McKinsey -  2009 – 2010: Dutch Bou'que – Marktlink Mergers & Acquisi'ons, Amsterdam -  2007 – 2009: Royal Bank of Scotland – Corporate Finance, Amsterdam -  2004 – 2009: ABN AMRO – Corporate Finance New York, Amsterdam -  2003 – 2004: Accenture – Consul'ng London, Amsterdam

•  Educa&on -  1997 – 2002: MSc Economics, Finance – University of Groningen, the Netherlands -  2003: Interna'onal & Asian Studies – Na'onal Sun Yat-‐Sen University, Taiwan -  2009 – 2011: Cer'fied Management Accoun'ng (CMA) – Ins'tute of Management Accountants

(IMA), United States -  2009 – 2001: Colloquium General & Modern Art – Academy for History of Art, the Netherlands -  2012: Interna'onal Financial Report Standards (DipIFRS) – Associa'on of Chartered Cer'fied

Accountants (ACCA), United States

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FUNDING TUESDAY, EVERY TUESDAY

So what can you expect from us each Funding Tuesday?

1.   Webinars on EFactor on Finance & Funding related topics in the EVENT Sec'on

2.  Blogs & interviews with informal investors and funded entrepreneurs with 'ps & tricks in the BLOGS sec'on under NOW

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3.  Finance & Funding related ar'cles on NOW feed

4.  In the Finance & Funding GROUP on our website you will find Q&As of the webinars under NETWORK

5.  In the KNOWLEDGE base you will find more and more presenta'ons on Finance & Funding related topics, including the webinar presenta'ons

6.  And if you become a VIP MEMBER you will personally be supported on your Finance & Funding related ques'ons

Webinar Program Overview 2012

June 19: Business Plan Wri'ng -‐ A Roadmap to Success July 3: Pitching & Presenta'on -‐ 3 Minutes, 1 Impression July 17: Strategy -‐ A Vision for the Future, A Strategy for Geing There July 31: Budge&ng & Forecas&ng -‐ Predic&ng the Outcome Aug 14: Working Capital -‐ An Unknown Key to Success Aug. 28: Capital Management -‐ Playing with Risk Sept 11.: Funding & Investments -‐ Some Sources are More Equal then Others Sept. 25: Valua'on -‐ Art or Science Oct 9: Exit Strategy -‐ Nice to Have or Need to Have? Oct. 23: Bootstrapping -‐ An Alterna've Answer to Funding Nov 6: Crowdfunding -‐ The Power of Friends, Family and Fools Nov. 20: Networking -‐ Nice You have 3000 Friends, I have 30 Relevant Connec'ons Dec. 4: Marke'ng & (Social) Media -‐ Noise or Value? Dec. 11: No Sales, No Glory Dec. 18: Most Common Mistakes of Entrepreneurs 5

The purpose of Financial Planning

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Financial Planning is a tool forcing you to think about every liYle detail on a period-‐by-‐period basis and relate financial consequences to it

1.   To-‐do list

2.   Task overview

3.   Empowerment

4.   Evalua&on

5.   Control

6.   Communica&on

Some terminology

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1.   Milestone Overview

2.   Financial Planning

3.   Targets

4.   Budget

5.   Master Budget

6.   Forecasts

A summary of your vision and strategy: Your Milestone Overview

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2012 2013 2014 2015 2016

Business Plan

Product development

Prod. A

Beta test

Product development

Going to market US

Alpha Customers

Get work space

Product development

Prod. B

Beta test

Going to market

Expand in EU + India

Break-even

Promotion campaign

Employees 3 5 8 10 12 15 20 25

Promotion campaign

Capital need: USD 150k 2nd round: USD 1mio 3rd round: USD 3mio

M M V

Revenue / margin 200k / 10% 1mio / 17.3% 4mio / 21% 12mio / 28%

Balance Sheet – simplified

• 

Balance Sheet – 31 Dec. YEAR 1

ASSETS EQUITY & LIABILITIES Fixed Assets 200 Equity 300

Retained earnings 200

Account Receivable 500 Total equity 500

Inventory 300

Total current assets 800 Debt 5% interest 250

Personal loan 200

Cash 50 Account Payable 100

Total liabili&es 550

Total 1,050 Total 1,050

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Profit & Loss statement or Income statement – simplified

Profit & Loss statement – YEAR 1 Revenue 1,000

Cost of Goods Sold (“COGS”) minus 400

Gross Profit 600 Gross margin 60%

Selling, Administra've, General Costs (“SG&A”) minus 350

Opera&ng result / Earnings before Interest and Tax (“EBIT”) 250 EBIT margin 25%

Interest (5% on 250) minus 12,5

Tax minus 37.5

Net profit / retained earnings 200

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Cash Flow statement – simplified

Cash Flow statement – YEAR 1 Cash sales received from customers 500

Cash paid to suppliers and employees minus 300

Interest & tax payments minus 50

Cash flow generated from opera&ng ac&vi&es 150

Addi'ons to equipment minus 50

Cash flow generated from inves&ng ac&vi&es -‐50

Payment debt minus 75

Cash flow generated from financing ac&vi&es -‐75

Net increase in cash 25

Beginning balance cash 1 Jan. 25

Year-‐end cash 50

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SIMPLE EXAMPLE OF FINANCIAL STATEMENT CALCULATIONS

You are star&ng a hotdog stand as of January Year 1 First thing to do is:

–  Incorporate a legal en'ty, put USD 18,000 in as equity and arrange USD 6,000 with a bank Assignment: what does the Balance Sheet look like on 1 December Year 0?

Second thing to do is:

–  Purchase inventory (sausage, sandwiches, mustard) for 1,650 hot dogs during December Year 0

–  Cost price USD 0.50 per hotdog –  Take into account that although you have to pay cash for your purchase, you will only receive your order in one month 'me

Assignment: what does the Balance Sheet on 1 January Year 1 look like immediately amer you made your order and paid?

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Case assignment 1: Balance Sheet

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Starting Balance Sheet December Year 0

Assets USD Liabilities & Equity USD

Stand 0 Equity 18,000

Retained Earnings 0

Inventory 0

Account payable 0 Debt 6,000

Cash 24,000 Account payable 0


Create star&ng Balance Sheet amer senng up legal en&ty

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Balance Sheet – 1st January Year 1


Stand 20,000 Equity 18,000

Retained Earnings 0

Inventory 0




Create star&ng Balance Sheet amer making first steps to start opera&ons

Assume the following for the first year of opera&ons:

Assignment: prepare the profit and loss statement of your first year in business

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Number of hotdogs sold 33,000

Consumer price USD 1,50

Purchased sandwiches, sausages & mustard equivalent of 34,980 hotdogs

Cost of Goods Sold (“COGS”): ingredients per hotdog USD 0.50

Selling, General & Administrative Costs (“SG&A”) and other costs USD 17,100

Depreciation USD 2,000

Interest rate over debt USD 6,000 6%

Tax rate 25.5%

Case assignment 2: Profit & Loss statement

Note: depreciaAon is included in the SG&A in this example 17

Revenue

minus Cost of Goods Sold (“COGS”)

Gross Profit

minus Selling, General, Administrative Costs (“SG&A”)

Operating result / Earning Before Interest & Tax (“EBIT”)

minus Interest

Profit Before Tax (“PBT”)

minus Tax

Net Profit


Profit &Loss statement

USD

Revenue 33,000 x 1.50 49,500

COGS 33,000 x 0.50 -16,500

Gross profit 33,000

SG&A -19,100

Earnings Before Interest & Tax (“EBIT”) 13,900

Interest 6% of 6,000 -360

Profit Before Tax 13,540

Tax 25,5% of 13,540 -3,453

Net Profit 10,087 Note: We assume we pay out 70% of our profit as a dividend, which equals to USD 7,061, i.e. the remainder (USD 3,026) will be transferred to Retained Earnings


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Case assignment 3: Cash Flow statement

In addi&on to preparing an income statement, a company must prepare a Cash Flow statement

–  The Cash Flow statement is like your bank statement. It shows how cash came in and went out

–  A Cash Flow statement simply describes the flows of cash-‐in and -‐out to different accounts over the course of one year

To understand cash flow, we will start to assess the cash account on the Balance Sheet. Almost every account on the Balance Sheet is linked to cash

Assignment: in order to prepare the cash account, we need to make some closing statements, prepare these

First we need to calculate our ending inventory:

The ending inventory stands at USD 990 per 31 Dec Year 1

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Ending inventory calculation

# hotdogs purchased 34,980

# hotdogs sold 33,000

Hotdogs in inventory 1,980

Purchase price of 1 hotdog USD 0.50 x

Total cost price of inventory USD 990

Case assignment 3: Cash Flow statement – closing statements

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Sales growth in Year 2 5%

Inventory 1st month Year 1 bought in December Year 0 #1,650

5% increase #83 +

Inventory 1st month Year 2 #1,733

Purchase price of1 hotdog USD 0.50 x

To receive – account payable USD 866


•  As you know, we need to pay our inventory one month in advance, i.e. in December we already need to pay for our stock in January

•  Given the current favorable market circumstances, we assume a 5% increase in sales growth for Year 2

•  As a consequence, we assume a similar development in our inventory on the right

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Sales growth in Year 2 5%

Inventory 1st month Year 1 bought in December Year 0 #1,650

5% increase #83 +

Inventory 1st month Year 2 #1,733

Purchase price of1 hotdog USD 0.50 x

To receive – account payable USD 866


•  As you know, we need to pay our inventory one month in advance, i.e. in December we already need to pay for our stock in January

•  Given the current favorable market circumstances, we assume a 5% increase in sales growth for Year 2

•  As a consequence, we assume a similar development in our inventory on the right

Beginning cash 24,000

Revenue 49,500

Stand -20,000

Cost of Goods Sold (“COGS”) -16,500

Selling, General, Administrative Costs (“SG&A”) -17,100

Interest -360

Tax -3,453

Dividend -7,061

Maintenance -2,000

Pay down of debt -1,000

Inventory -990

Account payable -866

Ending cash 4,170

Below we have portrayed an overview of all cash expenses since incorpora&on:

Case assignment 3: Cash Flow statement – cash count

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The crux of the Cash Flow statement is to separate cash flows from opera&ng ac&vi&es from the other cash flows Moreover, we need to filter out non-‐cash items such as deprecia&on The Cash Flow statement dis&nguishes between three types of cash flows:

–  Cash flow from opera'ons –  Cash flow from inves'ng ac'vi'es –  Cash flow from financing ac'vi'es

As you can see in this assignment, the financial statement are interconnected. This is high-‐lighted by the pink cell

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Earnings Before Interest & Tax (“EBIT”) + Depreciation

Operating cash flow before changes in working capital + Changes in working capital = Cash flows from operating activities (A)

+ Cash flows from investing activities (B)

+ Cash flows from financing activities (C)

= Net increase in cash (A + B + C) + Cash at 1 January Year 1 = Year-end cash


The Cash Flow statement can have the following structure:

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Earning Before Interest & Tax (“EBIT”) 13,900 + Depreciation 2,000 = Operating cash flow before changes in WC 15,900

Change in inventory -990 Change in account receivables -41 Change in account payables 0 Income tax expense -3,453

Cash from operating activities 11,416

Acquisition of PPE -2,000 Cash from investing activities -2,000

Pay down of debt -1,000 Interest expense -360 Dividend paid (notes) -7,061

Cash from financing activities -8,421

= Net increase in cash (A + B + C) 995 + Cash at 1 January Year 1 3,175 = Year-end cash 4,170

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Case assignment 4: Closing Balance Sheet

Now that we have prepared the cash statement we can also finalize the closing Balance Sheet. Prepare the closing Balance Sheet for Year 1

Balance Sheet – 31st December Year 1


Stand 20,000 Equity 18,000

Retained earnings 3,026

Inventory 990




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END EXAMPLE OF FINANCIAL STATEMENT CALCULATIONS

Example of a non-‐realis'c forecast

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BASIC ASSUMPTIONS

Amsterdam popula'on 800,000

Target group: 10% YUPPIES 80,000

Sales of meals year 1 20,000

Housing -‐ Suburban area Low cost

REALISTIC AT FIRST SIDE? YES!

Housing Posi've Low cost

Days per year 365

Meals per day c. 50

Meals per person yearly 4x

REALISTIC AFTER ANALYSIS? NO!

Housing Nega've No target

Days per year 47wks/5d 235

Meals per day Implied c. 85

Brand exposure 11% 85,000

Revenue Forecas'ng – star'ng point of everything

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Your Revenue Forecast is a star&ng point. Each cost item can be derived from revenue or build-‐up like the way revenue is build-‐up

1.   Split your revenue in units

2.   Use historical data

3.   Describe driving factors

4.   Look for paYerns

5.   Include new products

6.   do not forget prices

7.   Upside & downside scenario’s

8.   Compare with industry standards

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Financial statement item Standard model Consider

Revenue % growth GDP, market growth, inflation, volume vs. price, price pressure, product mix, acquisitions/disposals, regions

Cost of Goods Sold Directly related units sold price pressure, efficiency, product mix, raw material costs, inflation

Gross margin % of revenues price pressure, efficiency, product mix, raw material costs, inflation

Selling, General & Administrative costs

% of revenues

price pressure, efficiency, product mix

Operating costs growth % growth sales growth, variable vs. fixed costs, inflation, wage costs, efficiency

Depreciation % of opening tangible fixed assets

accounting policy change, large investments (current & historic)

Overview of forecas'ng parameters

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Amortisation % of opening intangible fixed assets

goodwill: linear write-off and no additions

Inventory (days) days of increased revenues efficiency of working capital, seasonality

Account receivable (days) days of increased revenues efficiency of working capital, country mix, seasonality, annual average

Other receivables % of increased revenues timing, annual average, constituents

(Operating) cash % of increased revenues idem inventory days, industry average

Account payable (days) days of total increased . costs idem account receivable

Other payables % of increased revenues idem other receivables

Overview of forecas'ng parameters – cont’d

Note: inventory days, account receivable days and account payable days will be explained in more detail in the next webinar, Aug. 14

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Capital expenditure (expansion and sustaining)

% of increased or total revenues large investments, maintenance versus expenditure

Dividend (pay-out ratio) % of net earnings before extra-ordinaries

% of earnings or stable Dividend per Share (“DPS”) growth

Preferred interim dividends % of preferred share capital outstanding

Preferred interim dividend % of preferred dividends

Interest on debt interest rate maturity of debt, default spread

Interest on cash interest rate current market rate

Overview of forecas'ng parameters – cont’d

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EXAMPLE OF FORECASTING

As you have just no&ced, forecas&ng is an exercise that requires us to make certain assump&ons on the development of our company:

–  We assume revenue growth with 5% in the first two years and thereater with 3% –  Moreover, we assume that COGS and SG&A as a percentage of revenues remain constant (i.e. Year 1 levels)

Assignment: Prepare the P&L for Year 2 to Year 5

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Case assignment 5: Forecas&ng Profit & Loss statement

Forecas&ng P&L

•  Revenues growth by more than USD 8,000 to almost USD 58,000 in Year 5 (=2011)

•  What can you say about the profitability of the company going forward?

P&L 2007 2008F 2009F 2010F 2011F

Revenues 49,500 51,975 54,574 56,211 57,897Growth 5.0% 5.0% 3.0% 3.0%

COGS -16,500 -17,325 -18,191 -18,737 -19,299As a % of revenues 33.3% 33.3% 33.3% 33.3% 33.3%

Gross Profit 33,000 34,650 36,383 37,474 38,598Gross margin 66.7% 66.7% 66.7% 66.7% 66.7%

SG&A -17,100 -17,955 -18,853 -19,418 -20,001As a % of revenues 34.5% 34.5% 34.5% 34.5% 34.5%

EBITDA 15,900 16,695 17,530 18,056 18,597EBITDA margin 32.1% 32.1% 32.1% 32.1% 32.1%

Depreciation -2,000 -2,000 -2,000 -2,000 -2,000As a % of revenues 4.0% 3.8% 3.7% 3.6% 3.5%

EBIT 13,900 14,695 15,530 16,056 16,597EBIT margin 28.1% 28.3% 28.5% 28.6% 28.7%

Interest (@ 6%) -360 -300 -240 -180 -120

PBT 13,540 14,395 15,290 15,876 16,47727.4% 27.7% 28.0% 28.2% 28.5%

Tax -3,453 -3,671 -3,899 -4,048 -4,202Tax rate 25.5% 25.5% 25.5% 25.5% 25.5%

Net Profit 10,087 10,724 11,391 11,827 12,276Profit margin 20.4% 20.6% 20.9% 21.0% 21.2%

Dividend (i.e. bonus for employee) -7,061 -7,507 -7,974 -8,279 -8,593Dividend ratio 70.0% 70.0% 70.0% 70.0% 70.0%

Retained earnings 3,026 3,217 3,417 3,548 3,683

Profit & Loss Statement Year 1 Year 2 Year 3 Year 4 Year 5

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Case assignment 6: Forecas&ng Balance Sheet

In our case, forecas&ng of the Balance Sheet requires liYle assump&ons –  We assume that Inventory and Receivables both remain at a constant percentage of revenues

All other BS items are a consequence of other decisions we have made at an earlier stage in our case:

–  Deprecia'on equals the maintenance investment in our stand, i.e. fixed assets remain constant

–  Equity is adapted automa'cally: the retained earnings from the Profit & Loss statement flow into Equity

–  Debt is paid down yearly in six years and subsequently decreases with USD 1,000 per year

Cash = last year’s cash + the net increase in cash (from CF)

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Balance Sheet Balance sheet 2007 2008F 2009F 2010F 2011F

AssetsKraam 20,000 20,000 20,000 20,000 20,000As a % of revenues 40.4% 38.5% 36.6% 35.6% 34.5%

Inventory 990 1,040 1,091 1,124 1,158As a % of revenues 2.0% 2.0% 2.0% 2.0% 2.0%Receivables 866 910 955 984 1,013As a % of revenues 1.8% 1.8% 1.8% 1.8% 1.8%Cash 4,170 6,294 8,614 11,101 13,720 As a % of revenues 8.4% 12.1% 15.8% 19.7% 23.7%

Total assets 26,026 28,243 30,661 33,209 35,892

Liabilities & EquityEquity 21,026 24,243 27,661 31,209 34,892

Debt 5,000 4,000 3,000 2,000 1,000

Payables 0 0 0 0 0As a % of revenues 0.0% 0.0% 0.0% 0.0% 0.0%

Total liabilities & Equity 26,026 28,243 30,661 33,209 35,892

Stand As % of revenues

Balance Sheet Year 1 Year 2 Year 3 Year 4 Year 5

Case assignment 7: Forecas&ng Cash Flow statement

With the informa&on presented (profit & loss and Balance Sheet) at hand now prepare the Cash Flow statement for Year 1 – Year 5

Cash Flow 2007 2008F 2009F 2010F 2011F

EBIT 13,900 14,695 15,530 16,056 16,597Depreciation 2,000 2,000 2,000 2,000 2,000Operating cashflow before changes in WC 15,900 16,695 17,530 18,056 18,597

Change in inventory -990 -50 -52 -33 -34Change in receivables -41 -43 -45 -29 -30Change in payables 0 0 0 0 0Income tax expense -3,453 -3,671 -3,899 -4,048 -4,202Cash from operating activities 11,416 12,931 13,533 13,946 14,332

Acquisition of PPE -2,000 -2,000 -2,000 -2,000 -2,000Cash from investing activities -2,000 -2,000 -2,000 -2,000 -2,000

Paydown of debt -1,000 -1,000 -1,000 -1,000 -1,000Interest expense -360 -300 -240 -180 -120Dividend paid -7,061 -7,507 -7,974 -8,279 -8,593Cash from financing activities -8,421 -8,807 -9,214 -9,459 -9,713

Net increase in cash 995 2,124 2,320 2,487 2,619

Cash at 1 January 3,175 4,170 6,294 8,614 11,101

YE cash 4,170 6,294 8,614 11,101 13,720

Cash Flow Statement Year 1 Year 2 Year 3 Year 4 Year 5

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END OF EXAMPLE OF FORECASTING

BALANCE SHEET

xUSD ths 2012 2013 2014 2015 2016

ASSETS

Cash 0 0 0 0 0

Account receivables 0 0 0 0 0

Inventories 0 0 0 0 0

Prepaid expenses 0 0 0 0 0

Other current assets 0 0 0 0 0

Total current Assets 0 0 0 0 0

Property, Plants, Equipement 0 0 0 0 0

Leasehold improvements 0 0 0 0 0

Vehicles 0 0 0 0 0

Other fixed assets 0 0 0 0 0

Total fixed Assets 0 0 0 0 0

TOTAL ASSETS 0 0 0 0 0

EQUITY & LIABILITIES

Accounts payables 0 0 0 0 0

Short-term interest bearing debt 0 0 0 0 0

Accrued expenses 0 0 0 0 0

Other current liabilities 0 0 0 0 0

Total current Liabilities 0 0 0 0 0

Long term interest bearing debt 0 0 0 0 0

Paid-in capital 0 0 0 0 0

Retained earnings 0 0 0 0 0

Total Equity 0 0 0 0 0

TOTAL EQUITY & LIABILITIES 0 0 0 0 0

error check = 0 0.0 0.0 0.0 0.0 0.0

PROFIT & LOSS STATEMENT

xUSD ths 2012F 2013F 2014F 2015F 2016F

Sales

Sales prod. A 0 0 0 0 0

Sales prod. B 0 0 0 0 0

Other Income 0 0 0 0 0

Total Sales 0 0 0 0 0

growth rate #DIV/0! #DIV/0! #DIV/0! #DIV/0!

Cost of Goods Sold

COGS prod. A 0 0 0 0 0

COGS prod. B 0 0 0 0 0

Gross Profit 0 0 0 0 0

gross margin #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

Selling, General & Administrative Expenses

Housing 0 0 0 0 0

Utilities 0 0 0 0 0

Management Fees 0 0 0 0 0

Personnel 0 0 0 0 0

Office expenses 0 0 0 0 0

Telephone costs 0 0 0 0 0

Subscriptions 0 0 0 0 0

Internet/website 0 0 0 0 0

Maintenance 0 0 0 0 0

Marketing 0 0 0 0 0

Travel & entertainment 0 0 0 0 0

Accounting 0 0 0 0 0

Legal 0 0 0 0 0

Other 0 0 0 0 0

Total SG&A 0 0 0 0 0

SG&A margin #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

EBITDA 0 0 0 0 0

EBITDA margin #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

Depreciation 5 0 0 0 0

Amortization 0 0 0 0 0

EBIT -5 0 0 0 0

EBIT margin #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

Interest 0 0 0 0 0

Net Profit Before Taxes -5 0 0 0 0

Profit margin #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

CASH FLOW STATEMENT

xUSD ths Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2012F

CASH INFLOWS

Cash Sales prod. A 0 0 0 0 0 0 0 0 0 0 0 0 0

Cash Sales prod. B 0 0 0 0 0 0 0 0 0 0 0 0 0

Payment of receivables 0 0 0 0 0 0 0 0 0 0 0 0 0

Other Income 0 0 0 0 0 0 0 0 0 0 0 0 0

TOTAL CASH IN 0 0 0 0 0 0 0 0 0 0 0 0 0

CASH OUTFLOWS

Cost of Goods Sold 0 0 0 0 0 0 0 0 0 0 0 0 0

Housing 0 0 0 0 0 0 0 0 0 0 0 0 0

Utilities 0 0 0 0 0 0 0 0 0 0 0 0 0

Management Fees 0 0 0 0 0 0 0 0 0 0 0 0 0

Personnel 0 0 0 0 0 0 0 0 0 0 0 0 0

Office expenses 0 0 0 0 0 0 0 0 0 0 0 0 0

Telephone costs 0 0 0 0 0 0 0 0 0 0 0 0 0

Subscriptions 0 0 0 0 0 0 0 0 0 0 0 0 0

Internet/website 0 0 0 0 0 0 0 0 0 0 0 0 0

Maintenance 0 0 0 0 0 0 0 0 0 0 0 0 0

Marketing 0 0 0 0 0 0 0 0 0 0 0 0 0

Travel & entertainment 0 0 0 0 0 0 0 0 0 0 0 0 0

Professional advisors 0 0 0 0 0 0 0 0 0 0 0 0 0

Tax 0 0 0 0 0 0 0 0 0 0 0 0 0

Payment payables 0 0 0 0 0 0 0 0 0 0 0 0 0

Loan Payments 0 0 0 0 0 0 0 0 0 0 0 0 0

Bank charges 0 0 0 0 0 0 0 0 0 0 0 0 0

Other 0 0 0 0 0 0 0 0 0 0 0 0 0

TOTAL CASH OUT 0 0 0 0 0 0 0 0 0 0 0 0 0

Cash in minus out per period 0 0 0 0 0 0 0 0 0 0 0 0 0

Funding (needed)/excess 0 0 0 0 0 0 0 0 0 0 0

BEGINNING BALANCE 0 0 0 0 0 0 0 0 0 0 0 0 0

ENDING BALANCE 0 0 0 0 0 0 0 0 0 0 0 0 0

Tips for financial modeling – planning in excel

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1.   Inputs in blue, formula’s in black

2.   Separate input sheet

3.   Transparency

4.   Break-‐down formula’s

5.   do not consolidate SG&A

6.   Actual versus forecasted

7.   Build your own model

Conclusion & final remarks

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Several purposes Financial Planning: •  To-‐do, task overview, empowerment, evalua'on, control and

communica'on

Dynamics of the 3 statements – a circle Think through, keep it simple and break-‐down

Next webinar = Aug 14:

Working Capital – An unknown key to success

Financial Planning is a tool forcing you to think about every liYle detail on a period-‐by-‐period basis and relate financial consequences to it

Webinar Program Overview 2012

June 19: Business Plan Wri'ng -‐ A Roadmap to Success July 3: Pitching & Presenta'on -‐ 3 Minutes, 1 Impression July 17: Strategy -‐ A Vision for the Future, A Strategy for Geing There July 31: Budge'ng & Forecas'ng -‐ Predic'ng the Outcome Aug 14: Working Capital -‐ An Unknown Key to Success Aug. 28: Capital Management -‐ Playing with Risk Sept 11.: Funding & Investments -‐ Some Sources are More Equal then Others Sept. 25: Valua'on -‐ Art or Science Oct 9: Exit Strategy -‐ Nice to Have or Need to Have? Oct. 23: Bootstrapping -‐ An Alterna've Answer to Funding Nov 6: Crowdfunding -‐ The Power of Friends, Family and Fools Nov. 20: Networking -‐ Nice You have 3000 Friends, I have 30 Relevant Connec'ons Dec. 4: Marke'ng & (Social) Media -‐ Noise or Value? Dec. 11: No Sales, No Glory Dec. 18: Most Common Mistakes of Entrepreneurs

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Thank you!

This document was prepared by Eva Hukshorn. Several people and organiza&ons have inspired

her to write this presenta&on, amongst which are, but not limited to the Founders of EFactor,

ABN AMRO/RBS, University of Groningen, Ins&tute for Management Accountants