Forecast Revenues and Costs

Business Plan Preparation College of Business Administration University of Central Florida

Week 10 Create Financial Statements

Financial Projections

Drivers Model Assumptions

Financial Dynamics Present Operations Plan

Financial Plan

Income Statement Balance Sheet Cash Flow Summary Assumptions

Operating Expenses
Marketing R&D Administration Total 60 Year 1 Year 2 Year 3 30 45 65

90

140

Cost of Goods
Direct Indirect Total

Year 1 Year 2 Year 3 70 130 160 30 70 90 100 200 250

Income Statement
Year 1 Year 2 Year 3 Revenue 250 350 500 COGs 100 200 250 Oper Expenses 60 90 140

Fixed Assets (Plant)

Year 1 Year 2 Year 3 Assets 200 300 400 Depreciation 140 210 260 Fixed Assets 60 90 140

Working Capital
Year 1 Year 2 Year 3 Receivables 100 200 300 Inventory 50 75 125

Balance Sheet
Year 1 Year 2 Year 3 Receivables 100 200 300 Inventory 50 75 125 Fixed Assets 60 90 140

Revenue Drivers

Number of customers, transactions or units Price per customer, transaction or unit Average revenue per customer or transaction Distribution channel discount Market penetration Response rate Churn rate Growth rate New services or product

Cost of Revenue Drivers

Personnel costs (labor and/or salary) Materials costs Yields Website operating costs Systems costs Warehouse and shipping expenses Returns Outsourcing expenses Lease and/or rental expenses Cost reductions Depreciation large capital expenditures

Operating Expense Drivers

Sales & Marketing

Customer acquisition cost Personnel expenses Sales commissions Exhibitions Brand building Tech support Customer service

Operating Expense Drivers

Research and Development

Personnel expenses Beta testing Time to market Patent and copyright application Prototyping Subcontracting Personnel expenses Recruiting expenses MIS expenses Office rent and utilities

General and Administration

Financial Dynamics

Who does the financial projections? Investor questions Drivers Optimism vs. Pessimism