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Case Study for E-Commerce Financial Model

Background

Our Client is a serial entrepreneur, who has invested in multiple businesses. Now he is willing to invest in e-commerce platform through foreign investment. This platform is a kind of niche market as he was only focused on a specific product. 

Challenges

Being an Investor Client wants to build a financial model to analyse the investment opportunity. Since he is based in Europe and going to invest in another country, so he had some contrasting demand for the financial model.

  • He wanted a Currency conversion in the model.
  • Deep analysis including transportation cost schedule and multiple sales channels.
  • Sensitivity Analysis with multiple scenarios.

Solutions

Oak Business Consultant helps him to build a dynamic financial model so that he can play with the numbers in the financial model.

We built the input button for Currency conversion and the whole financial model convert in that currency instantly.

We provide the following services;

Input Assumptions

We build a model for 3 years and we put all the assumptions in one sheet so that investor can change the numbers easily.

Input Assumption

Amortization and Depreciation Schedule

A business where there is a need to capitalized into fixed assets like machinery, equipment before commencing of the business. So investor necessarily wants to know the Assets valuations over an interval of time. This help the investor in valuations of the company.

Oak Business Consultant provides a proper schedule of Amortization and Depreciation for tangible or non-tangible assets.

User Acquisitions

This e-commerce plan has many sales channel, i.e. B2C, B2B, Drop Shipping, Ads Space, listing, Client wanted the real projection of Customers from all channels. By taking the marketing budget and divide the portion to SEO, Instagram, Facebook, and Promotions. Then we analyze the customers that come from multiple marketing channels.

Through this we were able to calculate the No. of Customers, his CAC and CLV.

User Acquisition

Three Financial Statements

After determining the Customer Acquisition, We built the Income Statement, Cash Flow Statement and Balance Sheet.

Income Statement

Cash Flow and Balance Sheet

KPI’s / Key Metrics

The next step was to measure the performance of the operations. Every industry has its own metrics to analyze, we build KPI metrics for E-Commerce in order to determine the performance.

Oak Business Consultant developed the metrics on the month’s bases so that it gives a deeper analysis.

We built Average Order Value for B2C, Average Order Value for B2B, Average Order Value, and Value per Visits, ARPA, Churn Rate, Net MRR, CAC, CLV, and CLA to CAC metrics.

Key Metrics

Dashboard

Dashboards provide an unbiased and a comprehensive snapshot of the company’s performance overall. We provide profitability dashboard, key metrics graphs like CAC, CLV, MRR, Cash Flow graphs and Breakeven analysis. These dashboard helps the investor or management to understand broader view into one single sheet.  

Dashboard

Project Evaluations

Being an Investor, you always want the comparison of the equity he is taking against the investment. So, an investor wants to determine the company’s worth based on his future earning, Assets based or P/E multiple.

We provide investor discounted cash flow, NPV, IRR or free cash flow, also we provide the analysis of Investment vs equity comparison as well.
Project Evaluation

Sensitivity Analysis

When the business is in the idea stage, it is stuff to predict the actual market or scenario when a business starts its operations. So we did a sensitivity analysis for a client, having 3 kinds of situation for sales, i.e. Low, Moderate and Optimistic. We also analyzed the outcome in different situations. Furthermore, it really helps the investor to gain insights into its profitability in case the business could not achieve their sales target or provide.

Sensitivity Analysis

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