2. INTRODUCTION
StartNowHow
• Open seminar series for active and prospective entrepreneurs
• 10 sessions on monthly basis until summer 2015
• Covers relevant theoretical and practical aspects of entrepreneurship
• Based on lecture „entrepreneurship“ @Bogazici University
• Based on experiences of entrepreneurs, investors, mentors and consultants
• Each session with guest speaker (entrepreneurs, investors, mentors, etc.)
• Seminar materials can be downloaded after the event
• Thursdays 17.15h – 19.30h
• Next session: Thu, May 14th, 2015
• TOPIC: Marketing planning and control – the role of key performance
indicators
• SPEAKER: tbd
• Certificate provided for participants joining at least 7/10 sessions
• Early registration for each session required (eventbrite), capacity 50 people!
• Priority for regular participants
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3. INTRODUCTION
StartNowHow - Seminar Topics (preliminary)
1. Mon, 20.10.: The entrepreneurial ecosystem in Turkey
2. Mon, 10.11.: Entrepreneurship as a profession
3. Mon, 8.12.: Opportunity recognition and evaluation
4. Mon, 12.1.: Planning, testing and developing a business model
5. Thu, 19.2. – lot of snow but no seminar -
6. Thu, 19.3.: Market and competitor research
7. Thu, 16.4.: Financial planning for startups
8. Thu, 14.5.: Marketing planning and control – the role of key performance
indicators
9. Thu, 11.6.: Funding the startup – stage financing for ventures
10. Thu, 9.7.: The investment process – pitching, negotiations and termsheet
11. tbd: Success and failure as an entrepreneur
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4. FINANCIALPLANNING
Step 1: Revenues and Cost of Goods Sold Planning
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• Revenue Estimation
• Identify all sources of revenues
• Estimate future revenues after establishment per day (or month, depending on industry)
• Understand revenue drivers
• Number of customers
• Number of products / average ticket per customer
• Average Revenue per customer (net, after VAT)
• Cost of Goods Sold Estimation (Direct Cost)
• Calculation of direct cost of goods sold (Examples: buying price, direct production cost)
• Calculation of gross margin (revenues minus direct cost) per unit and product / service
• Aggregation for income statement calculation
• Calculation of monthly revenues / COGS / gross margin based on assumptions about
seasonality / sales growth over time / time until business is established
• Calculation of first three years on monthly (or quarterly) basis, years 4 + 5 on yearly basis
• Result: Revenues / COGS / Gross margin years 1- 5
• Consideration of risk for gross margin part of income statement
• Scenario analysis (e.g. Best / expected / worst case)
• Sensitivity analysis (for full, integrated set of financial statements)
• Simulation (possible with probabilities / Monte-Carlo-Simulation as well)
6. FINANCIALPLANNING
Cost of Goods Sold
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Source: Bygrave, W.D. / Zacharakis, A., The Portable MBA in Entrepreneurship, p.145
7. FINANCIALPLANNING
Step 2: Completion of Pro-Forma Income Statements
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• Other Operating Expenses (indirect production cost, marketing + sales, gen.admin.cost)
• Calculation of personnel cost
• Personnel planning for full five years (position x number of employees / position x
average salary incl. Employer part of social security contributions, other personnel-
dependent cost)
• Calculation of all other time-dependent operating expenses
• Calculation of start-up cost during setup period
• Calculation of depreciation / amortization based on investment plan / depreciation plan
• Calculation of cost on monthly basis for years 1-3, yearly basis years 4-5
• Other Operating Income
• Calculation of other operating income positions for 5-year period
• Gross margin – operating expenses + other operating income = EBIT
• EBITDA = EBIT + depreciation / amortization
• Calculation of financial result
• Consideration of interest expenses for long-term loans or other types of debt
• If applicable, calculation of other regular financial income / financial expenses
• EBIT +/- financial result = EBT (earnings before taxes)
• Calculation of taxes on income
• Normally in % of EBT, if applicable consideration of losses carried forward
• Net Profit / Loss = EBT ./. Taxes on income
13. FINANCIALPLANNING
Seasonality and Sales Growth
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Source: Bygrave, W.D. / Zacharakis, A., The Portable MBA in Entrepreneurship, p.155
14. FINANCIALPLANNING
Step 4: Determination of Operative Cash Flow
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• Indirect calculation of operative cash flow: Starting point net profit / loss of period
• + adding back: depreciation / amortization of that period
• +/- changes in working capital
• - increases in accounts receivables
• - increases in inventories
• + increases in accounts payables
• Alternative: direct calculation of operative cash flow
• Consideration of cash-effective revenues in month of cash effectiveness
• Example: 70% cash, 20% credit card = 1 month later, 10% per invoice with 5% payment
within one month, 5% payment within two months after purchase
• Consideration of cash-effective expenses in month of cash effectiveness
• Example: standard payment term for suppliers of 30 days = consideration of cash
outflow one month after purchase
• No consideration of non-cash-effective expenses, e.g. depreciation
• = Operative cash flow
15. FINANCIALPLANNING
Operative Cash Flow Months 1-6
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Source: Bygrave, W.D. / Zacharakis, A., The Portable MBA in Entrepreneurship, p.157
16. FINANCIALPLANNING
Step 5: Determination of Complete Cash Flow Statements
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• Calculation of investment plan
• Calculation of all investments in fixed assets for full five-year period (material,
immatierial, financial investments)
• If applicable, consideration of desinvestments
• All investments / desinvestments with full cash amounts
• Calculation of financing plan
• Consideration of long-term loans for financing the venture
• Consideration of interest expenses in income statement
• Consideration of principal repayments
• Consideration of equity measures (increases / decreases)
• Consideration of dividend payouts
• Cash Flow Statement Structure
• Cash at beginning of period
• +/- Operative cash flow
• +/- Cash flow from investment activities
• +/- Cash flow from financing activities
• = Cash at end of period
• Cumulative cash flow statement (for full five years) is used for iterative funds required
calculation / funds planning
17. FINANCIALPLANNING
Total Cash Flow / Funds Needed
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Source: Bygrave, W.D. / Zacharakis, A., The Portable MBA in Entrepreneurship, p.158
18. FINANCIALPLANNING
Step 6: Completion of Pro-Forma Financial Statements
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• Balance sheet at beginning of venture
• Normally only initial equity + cash
• Balance sheet at end of each period
• Consideration of income statement for period
• Consideration of changes in working capital (accounts receivables, inventories, accounts
payables) in balance sheet at end of period
• Consideration of investments and depreciation in balance sheet at end of period
• Consideration of loan repayments / additional loans in balance sheet at end of period
• Consideration of equity measures / dividend payouts in balance sheet at end of period
• Result: Full set of integrated pro-forma financial statements
• Balance sheets for t = 0 to t = 6
• Income statements for periods t0-1 to t4-5
• Cash flow statements for periods t0-1 to t4-5
• Investment plans for periods t0-1 to t4-5
• Financing plans for periods t0-1 to t4-5
19. OUTLOOK
StartNowHow - Outlook
• Today‘s materials will be made available to participants for downloading
• Next Seminar: „Marketing planning and control – the role of key performance
indicators”
• Guest Speaker: tbd
• Thursday, 14.5.2015, 17.15 – 19.30h
• Don‘t forget to register early (eventbrite) - capacity 50 people!
• Priority for participants / registrants from today‘s session
• General rule: Allocation of seats according to participation
• Regular participation = certificate (70% participation)
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