It's Not a Plan Until the Numbers Add Up: StartupModels.com – A Guide to Building Financial Models For Business Using finmodel4.xls
by david on Thursday, October 13th, 2011 | 3 Comments
It's Not a Plan Until the Numbers Add Up: StartupModels.com – A Guide to Building Financial Models For Business Using finmodel4.xls
It's not a plan until the numbers add up. More than the title of this book, it is a truth of business creation. This book along with the free companion Excel model, finmodel4.xls, available at www.startupmodels.com allows you to quickly and easily create a financial model for your startup business or business expansion.
You would not invest in a mutual fund with a negative return. You want to know that your investment will benefit you in the end. Your business partners, financiers, s
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For The Entrepreneur That Needs Financial Modeling Help,
I have worked with many entrepreneurs that have great ideas but don't understand what it takes to start and run a business. More importantly, many don't even realize that they need to test their idea to see if it makes financial sense (and can make money). Mike's book is a great tool for any entrepreneur that needs some help with the basics around building a financial model and determining if the idea makes sense to put to practice.
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|A resource based on experience,
Mike Colwell is an authority on start-up businesses. He's proven that with the creation of finmodel4.xls and the companion guide. The insights and direction that Mike adds in the guide can only come from the experience he has working on his own projects and assisting others. As an economic developer that receives inquiries from people starting up their own businesses, I will not hesitate to refer them to Mike's work.
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|Must Read For Entrepreneurs Who Hate Financials,
The single worst part of being an entrepreneur is dealing with financials. This guide along with the spreadsheet makes it 1000x times easier. Mike's done all the hard work coming up with the formulas. All you need to do is spend a couple hours with the guide to have a nice financial picture of your business. It's a great tool to validate a business in the lightbulb phase when you are validating an idea. If you can't make it work on paper (in this case a spreadsheet) – it's going to be real hard to make it work for real.
I just started a business selling a physical product that needs manufactured, shipped, packaged, etc. As a primarily internet entrepreneur I was overwhelmed by all the numbers I needed to crunch to come up with pricing and projections.
We've been able to calculate initial demand through prelaunch signups and social interest. Using this data we can plug in projected numbers and play around with the price of the product to see how it affects the bottom line.
And with a little data sprinkled on top of this model you can see if putting money in one end makes more money come out the other.
Ex: This data can also help you plan online advertising campaigns. Lets say you have a 60% click thru rate on an ad and that ad has a 6% conversion rate. The CPC for the ad is $.50. If you send 1,000 people to your ad next month it will cost you $500. At a 6% conversion rate you will have 60 sales.
You can plug these numbers into Mike's spreadsheet to see how it affects your cash flow. Plug $500 into the "Marketing" section of the "G&A Expenses" sheet for October. Then go plug in 60 sales for October in the "Product Revenue" sheet. Finally go to the "Cash Flow Statement" sheet and see how you are looking.
You can then play with these numbers by extrapolating them out over a year or modifying the conversion rate and click thru rates. You could make it a goal to increase your conversion rates from 6-8% and using Mike's model you can see – in real numbers and data – how it will affect your cash flow.
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