One of our USA based client working on a startup approached us to build a Financial Model from scratch. When the work got completed and delivered to this client, his friend, and business partner, who is also responsible for running her own separate Events Management and E-Store business, saw our impressive work and decided that she wants a Financial Model just like that. She loved our easy to understand the financial model. Even though she already had a Financial Model and Business plan, she said she wants a new financial model for her business.
Her business’s existing business plan was thoroughly made using advanced Excel formulas and too many advanced logical assumptions, which were not easy for her to understand and make changes by herself.
After a few months of transforming her business idea into a reality, she found out that she needed to make a few changes to her financial projections. But as the model was hard to understand, she could not do it, and the analyst who made the first financial model was no longer available at that time.
It meant that she had to hire another expert to make the required changes for her and encompass extra cost every time she has to make any changes.
Oak Business Consultant became the advisor in this project for financial model and business valuation. The critical part was to analyze the market size and keep it dynamic as inputs so she may able to make future changes easily. Based on the market research, we built a financial model with the following services.
We built input assumptions of initial-investment, followed by Assets and operating expenses to forecast the expected costs. In the event management business, the variable cost increases as the transactions increase, like support staff cost (No. of employees increase when no. of transactions increase.
We took the expenses and revenue growth based on the prior data of the company.
In the first section of the income statement, we forecasted the no. of vendors registered, party planners, wedding planners, party venues, and the expected number of transactions on the E-Store. Along with that, we analyzed the churn rate of customers who are not doing any activity after registering for the client’s platform.
After analyzing the no. of customers, we projected the revenue. This company has multiple revenue models. We calculated the income for each model separately.
After compiling the revenue and expenses, we calculated the monthly and yearly income statements.
Oak Business Consultant prepared the depreciation schedule because this project requires a significant investment in data security and safety measures.
We built cash flow analysis, which was linked with Income Statement and input assumptions. So that there was no need to add in the sheet, and the sheet change instantly.
Then we build a third and last financial statement, i.e., a Balance sheet. This was also linked with Input sheets and cash flow.
Every business has to know its breakeven point. It helps investors and entrepreneurs set the mark to put extra effort to cross this point.
Graphs speak more than numbers because they help both the investor and Entrepreneur see the graphical representation of the projection.
Being an Investor, you always want the comparison of the equity against the Investment. So, we helped them to determine the company’s worth based on his future earnings. We provided them discount cash flow, NPV, IRR, or free cash flow; also, we provide an analysis of Investment vs. equity comparison.
When the business is in the initial stage, sensitivity analysis can predict the actual market or scenario when the company does lots of marketing. We did a sensitivity analysis for a client, having 3 kinds of situations for sales, i.e., Low, Moderate, and optimistic, and analyzed the outcome in different circumstances. It really helps the client to gain knowledge of what if a business could not achieve its sales target.