Financial Model for a Subscription-Based RMS Firm – Case Study
Financial Model for a Subscription-Based RMS Firm – Case Study
Introduction
Oak Business Consultant provides customized business and financial consulting services to businesses looking forward to sustainable success through professional financial planning. Oak provides business and financial consulting through financial modeling, market analysis, business planning, and strategic advisory tailored to a firm’s needs.
This case study highlights the solutions provided by Oak to a client who provides SaaS services to the restaurant industry, including a restaurant management system. Having previously engaged with Oak Business Consultant for the development of a financial model aligned with its initial business framework, the client experienced firsthand the value and expertise our professional services brought to their organization. Satisfied with the results delivered per their specific requirements, the client has returned to us once again, demonstrating a continued trust in our ability to provide tailored and effective solutions.
Due to changing market conditions and to expand its customer base, our client has restructured its business model. This time, the main requirements of the client included a financial model and investment analysis based on the client’s new business model. Following this, the Oak team provided a comprehensive and dynamic financial model as per the client’s requirements, and this paved the way for further solutions for the client’s stated challenges. The upcoming sections of this report state the background of this client, highlight the challenges of this firm and the details of expert solutions provided by Oak, as well as the strategic insights that empowered the client to make informed decisions and position its services effectively in the competitive restaurant industry.
Current Scope of SaaS for the Restaurant Industry and Client’s Background
The dynamic and rapidly evolving nature of the restaurant industry poses challenges for managers to stay updated on the latest trends and best practices. To address this, an increasing number of restaurants are adopting innovative restaurant management systems to enhance operational efficiency and reduce costs. Restaurant Management System (RMS) is a SaaS technology for the restaurant industry. This software solution is designed to streamline operations across various food service businesses, including restaurants, cafés, bars, takeaways, food deliveries, contract catering, and cafeterias.
The SaaS industry is expanding rapidly in the restaurant sector, and our client is a noticeable competitor in this domain. Our client provides the RMS software solution along with other upgrade/support services to the restaurant industry in multiple regions across the world. As previously highlighted, the client has strategically realigned its business model to enhance customer penetration. This intentional shift reflects the company’s proactive stance in adapting to market dynamics and optimizing its approach to better serve and engage a broader customer base.
Hence, the client’s main requirement was to develop a financial forecast based on the new business model to analyze its position and competitiveness in this emerging market. This firm engaged the expert team at Oak Business Consultant to create a comprehensive financial model that not only provided insights into the client’s position but also laid the foundation for strategic decision-making in the ever-evolving business landscape. This collaboration illustrates Oak’s ability to transform challenges into opportunities for growth across diverse industries.
Challenges
As stated before, the primary challenge of the client was to forecast revenue, cash flow, and profitability for the next five years based on its revised business model. This revenue and profitability analysis required user projections for the firm for each type of service, whether ongoing or one-time. Additionally, the evolving market dynamics and competition posed challenges in accurately assessing the firm’s position and competitiveness. The need to secure investments or financing for the implementation of the new business model added further complexity, requiring a detailed financial forecast and competitor analysis (benchmarking) to instill confidence in potential stakeholders.
In this scenario, the main challenge for the team was to develop a dynamic and user-friendly financial model that was according to the client’s preferences. This involved using complex logic through Excel formulas while ensuring that the financial model remained user-friendly, allowing the client to input preferences effortlessly, resulting in instantaneous and dynamic changes throughout the entire model.
Solutions
The expert team at Oak developed the financial model that showcased a shift in business model in both the user projections template and revenue forecast sheet, specifically catering to the needs of a restaurant management system. Multiple features and assumptions accompanied user and revenue projections in the model. This included the use of a target market, addressable market, and penetration rates for each region to estimate user projections and the use of different customer churn rates to calculate users for each service based on assumed segmentation percentages. We provided flexibility in calculating revenue, allowing for variations in upgrades and free trial scenarios.
Moreover, to navigate the challenges posed by evolving market dynamics and secure investments for implementing the new business model, the team carried out a strategic approach involving a comprehensive competitor analysis and detailed financial analysis. Conducting a thorough examination of competitors allows for strategic differentiation and identification of areas for innovation, enhancing the firm’s overall competitiveness. Simultaneously, developing a meticulous financial analysis provides stakeholders with a clear understanding of the business’s financial trajectory, instilling confidence and facilitating informed investment decisions. By intertwining competitor analysis and financial analysis, the firm can present a robust case that not only addresses market challenges but also demonstrates a strategic and financially viable path forward, thereby attracting potential stakeholders and securing essential investments.
The team tackled the challenge of creating a dynamic and user-friendly financial model aligned with the client’s preferences. They crafted a solution by incorporating intricate logic using Excel formulas, all while prioritizing simplicity. This enabled the client to effortlessly input their preferences, triggering instant and dynamic updates throughout the entire model. The emphasis on user-friendliness ensured a seamless experience for the client, enhancing their ability to navigate and interact with the financial model effectively.
Financial Model Aspects
This section of the report includes a detailed description of different aspects of the financial model that were tailored to the needs of the client.
Input Assumptions
The team added two types of input assumptions to the model: general assumptions and revenue assumptions. The general assumptions included tables for financing, operating expenditure, capital expenditure, working capital, payroll, marketing budget, and other assumptions. The revenue assumptions sheet included assumptions like churn rates, growth rates, conversion rates, and user segmentation for subscription services and additional services.

User Projections
User projections were derived from user estimates that were, in turn, based on the total market opportunity, total addressable market, market share, and penetration rates. After the calculation of user projections for each target region, users were separated for each type of trial package and then for each service based on segmentation rates.

Revenue Analysis
Once a comprehensive user projections template was ready, the next was to calculate the revenue being generated from each type of service on both an annual and monthly basis. This was calculated with the help of user projections and fees per service mentioned in the revenue assumptions sheet. Revenue was dependent upon user projections and the model was dynamic enough to demonstrate how revenue generation changes with the shift in business offerings. The revenue assumptions sheet and revenue analysis were linked to allow the team and the client to adjust total revenue and profitability figures by changing the input values only.

In addition to the revenue analysis section, the revenue analysis sheet featured two crucial segments: one focused on cost estimates per service, and the other on the analysis of unearned revenue. The cost section calculated costs based on the type of service and user projections, while the unearned revenue analysis determined the portion of monthly revenue to be considered unearned from each revenue stream and thus reported as a liability in the balance sheet.

Historical Analysis
Our team developed a comprehensive annual historical cost analysis using the data provided by the client. This analysis not only presented an annual breakdown of various types of historical costs but also included their allocation to different cost categories, such as business setup costs and team compensation. The primary objective of conducting this analysis was to estimate the total figure representing the owner’s investment.

Competitor Analysis (Benchmarking)
Following the client’s subscription-based Restaurant Management Sytem specifications, the Oak team compiled a competitor analysis sheet that encompasses revenue, cost, and profitability data from the three primary competitors of our client. The search for competitors’ data was conducted with a focus on aligning the revenue and cost figures with services that closely correspond to those offered by our client. This approach ensures a relevant and meaningful comparison within the competitive landscape.

Financial Statements
After completing the revenue, cost of goods sold, operating and capital expenditure, payroll, and marketing analysis, the next major step was the preparation of the three main financial statements: income statement, cash flow statement, and balance sheet. All three statements included both monthly and annual forecasted figures for the next five years.
The first section of the financial statement analysis was the income statement. Our Team prepared an easy-to-understand profit and loss statement for our client’s company to track financial performance over time. The income statement showcased the revenue, cost, and profitability projections along with profitability margins such as gross profit margin, EBIT margin, and net profit margin.

The next section was the cash flow statement. As per our client’s subscription-based Restaurant Management System requirements regarding cash flow analysis, we prepared a cash flow statement that highlights the cash flow provided through the company’s operating, investing, and financing activities for the next five years. This statement also included computations for cash investment required in each accounting period to cover a deficit, if any. This tool will aid our client in tracking its cash inflows and outflows over a specified period.

The last section of the financial statement analysis was the balance sheet. This statement highlighted the client’s assets, liabilities, and equity figures, both annually and monthly. Emphasizing key aspects, such as the owner’s initial investment, investments from other stakeholders, and unearned revenue liability, the balance sheet served as a crucial element in evaluating the financial standing of the client.

Financial Analysis
Our team recognizes the critical role of financial analysis in evaluating a company’s performance, profitability, and overall financial health, offering essential insights for well-informed decision-making. Although financial statements provide valuable information, they may lack context, emphasizing the need for supplementary analysis to interpret trends, evaluate risks, and guide strategic business decisions. The team added multiple sections in the financial analysis sheet focusing on different types of financial metrics, such as revenue-cost analysis, cash utilization analysis, CAC-CLV analysis, and financial ratio analysis. Subsequent sections will delve into a detailed explanation of these diverse analyses.
Revenue-Cost Analysis
This annual analysis starts with forecasted figures of total users and total revenue of the firm for the computation of average revenue per customer. Similarly, average cost and average gross profit per customer was calculated. The next section of this analysis entails a detailed breakdown of revenue figures, categorizing the income generated from different services.

CAC/CLV Analysis
The team conducted a comprehensive Customer Acquisition Cost (CAC) to Customer Lifetime Value (CLV) analysis. This involved assessing the costs incurred in acquiring new customers relative to the long-term value they bring to the client’s business of subscription-based restaurant management system. This analysis enables strategic insights, allowing the client to refine marketing strategies for sustainable profitability throughout the customer lifecycle.

Cash Utilization Analysis
This analysis was another major requirement of the client. The team calculated the annual net cash flow available for expansion by categorizing cash inflows and outflows of the business for each year. This analysis assessed how investments and revenue covered costs, leaving cash for expansion.

Financial Ratio Analysis
We added essential profitability, solvency, liquidity, and efficiency ratios for assessing the client’s financial position and industry trends.

Dashboard
In the client’s SaaS business financial model, we added a dashboard with charts displaying key financial metrics. This setup offers the client a quick overview of significant figures and their variations compared to the previous year. Notably, graphical representations for revenue segmentation, cash flow segmentation, cash flow analysis, as well as profitability, are included. The team added a scorecard to the dashboard, featuring key financials like revenue growth, NPV, IRR, and profit margins.

Strategic Insights
Our financial modeling provides crucial insights for client financial planning and investments. These insights guided the client, facilitating informed decisions and strategic actions in fiscal planning and investments.
Conclusion
Oak Business Consultant excels in tailoring financial models, business plans, and pitch decks for startups in diverse industries. Our profound knowledge, shaped by understanding client needs and financial landscapes, ensures steadfast support throughout their growth journey. This case study highlights our expertise in creating user-friendly financial models with precise projections and strategic support. Our commitment to thorough market research and accurate financial forecasting provides a clear roadmap to success. Oak Business Consultant offers expert financial planning and strategic guidance for entrepreneurial success.
What Oak Business Consultant Offers?
At Oak Business Consultant, our commitment is to deliver professional financial and business analysis, catering to your financial planning requirements. Our services span Financial Modeling, Business Plans, Pitch Decks, and beyond. We help business owners with fundraising, growth plans, market targeting, and financial projections. Discover our template offerings by visiting the provided URLs:
- Cash Flow Template for SaaS
- Marketing Budget Tool with CAC Analysis for SaaS
- SaaS Pitch Deck Template
- Fintech SaaS Excel Financial Model
- SaaS Customer Services Software Excel Financial Model
- SaaS E-Commerce Software Excel Financial Model
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