Fuel Energy (CNG/LNG) Financial Model – Case Study

Introduction

Oak Business Consultant is a Financial and Business Consultancy offering comprehensive Financial and Business Planning and Management Services to various industries, including the Energy Industry. In this case study, we showcase our collaboration with a dynamic startup from the fuel industry that approached us for assistance in creating a financial model covering 5 years and a Valuation Report. The aim was to provide the client with precise projections and valuable insights to aid their business planning and decision-making. Our expertise in developing a financial model for the fuel industry ensured accurate analysis and strategic guidance for our client’s venture.

Client Background

The client is a startup bringing infrastructural development to their country, focusing on providing fuel energy for road transportation. They are focused on processing Natural Gas into CNG and LNG and selling it to vehicles. Moreover, they are also focused on converting vehicles towards the CNG and LNG fuel from Petroleum. So our client required a robust and dynamic financial model to know the business’s feasibility and profitability, take corrective actions beforehand and also raise investment in the form of capital.

Business Objective

The client’s business objective is to provide their country’s transportation with cheaper fuel and bring infrastructural development to their country. Their main objective is to install one million vehicles with CNG kits. For their objective, they needed a Financial Model to find the expected capital that they have to raise for their required goal. Leveraging a Financial Model for the Fuel Industry will enable precise assessment and strategic planning to achieve their ambitious targets.

Our Approach

Oak Business Consultant started by understanding the client’s business model, goals, and objectives. We conducted meetings with the management team to understand their current operations, plans, and challenges. Our initial consultation with our client was thorough. We discussed to gather essential information. The topics covered their startup energy business, operations, and financial objectives. We aimed to understand their revenue streams, cost drivers, key performance indicators, production volume, payroll, and growth strategies. This understanding formed the basis of the development for the financial model.

Technical Complexity/Challenges

Revenue Stream

One of the major challenges that we faced during the construction of the financial model was the Revenue Streams. The client’s main focus was the conversion of 1 million vehicles and further providing them with CNG and LNG by producing them by themselves. Furthermore, they were also planning to earn through providing training to the technicians who are trained to install the kits in the vehicles. Overall, the client knew about their costs and as for the pricing, it was supposed to be based on a few margins, which our team had to calculate according to the market research.

Customers

Our team encountered another challenge during the development of the financial model. It was related to calculating the customers targeted over 5 years. The goal was to reach one million customers in 4 years. Consequently, we had to adjust and ensure the customer flow projections were realistic. As can be seen in the picture below

Solution

The financial model for fuel industry that our experts made for the client helped them understand their revenue streams, costs, and overall company’s financial performance for the upcoming five years. The model includes all the important calculations, such as revenue, expenses, financial ratios, breakeven analysis, and other financial calculations, which can help our clients to understand the performance of their business as well as to use it for financial planning and to attract investors.

Furthermore, the financial model for fuel industry is dynamic and user-friendly. It has detailed assumptions, which are changeable inputs. By having these options, the client can easily alter the values in input according to their need. Additionally, the model provided our clients with a clear comprehension of their financial position, empowering them to formulate effective financial strategies and make informed decisions for the future. The subsequent section illustrates the financial statement and future projections.

Financial Highlights

Input Sheet

The below input assumption sheet helped and allowed our client to change their assumptions in highlighted cells, and the model will be updated automatically. Furthermore, this user-friendly and dynamic financial model for fuel industry fulfilled our client’s requirements per their projection requirements.

Revenue Projection

Our expert team incorporated advanced formulas to make this financial model for fuel industry dynamic and user-friendly, which helped our client generate revenue projections for 5 years. The client has multiple revenue streams with complex cost streams; thus, we developed the model for our client’s ease. The revenue projection can be seen in the image below.

Income Statement

The profit and loss statement plays an important role in financial projections. It shows revenue, operating expenditures, and profits for a specific year. Our expert team developed a monthly and yearly profit and loss statement where our clients can compare and analyze each year’s performance and their profits.

Cash Flow Statement

The Cash Flow Statement is also one of the key reports in financial projection; it shows the inflows and outflows of cash in your business. The user can view their performance on a monthly and yearly basis which helps to make projections more efficient and per our client’s requirements. All the components of the Cash Flow Statement are mentioned in this financial model for the fuel industry, which includes Financing, Operating and Investing activities, and net cash increase and decrease.

Balance Sheet

The Balance Sheet stands as a fundamental indicator of the financial position and financial health of the company. It provides a side-by-side comparison of assets, liabilities, and equity. Our adept team employed advanced formulas to craft this statement, offering our client a valuable tool to analyze their financial position efficiently. The dynamic nature of this financial model for fuel industry ensures that the balance sheet automatically updates whenever changes are made to the assumptions sheet.

Financial Ratios

Financial ratios serve as an indispensable instrument for evaluating a company’s performance and financial health. We undertook a comprehensive evaluation of financial ratios for our client. This encompassed the calculation of the most relevant ratios, addressing factors like profitability, equity, return on assets, EBITDA margin, and net profit growth.

Sales Summary

Our experts meticulously compiled a sales summary for the project where they highlighted the revenue earned from each revenue stream of the client. It showed not only their total revenue but also the revenue per unit, cost per unit and margin per unit. This highlights the business’ earning potential over the period of 5 years and how each revenue stream will grow over this time period.

Conclusion

Oak Business Consultant takes immense pride in its role in developing a startup financial model for fuel industry. Our financial model is a reflection of our deep understanding of our client’s financial standing, enabling them to make strategic, informed decisions for their business. Our commitment extends beyond the initial engagement as we continue to provide unwavering support to our client on their journey to grow their business and achieve their objectives.

At Oak Business Consultant, our forte lies in propelling businesses towards exceptional performance. Our approach is rooted in in-depth market research and precise financial forecasting. Furthermore, we provide our clients with a critical perspective. This perspective encompasses every facet of their company. We serve as a guiding light as they navigate their journey. Their journey leads toward success in the industry.

What Oak Business Consultant Offers?

As professional and proficient financial and business analysts at Oak Business Consultant, we are dedicated to supporting you. Our focus is on your financial planning endeavors. We take pride in offering exceptional financial services to all business owners.

Our diverse services include Financial Modeling, Business Plans, Pitch Decks, and more. Additionally, we possess the expertise to assist you in fundraising and developing a comprehensive business plan. Our Business Plans incorporate strategies to target the right market and foster sustainable growth. With our financial models, you can forecast future financials and seamlessly integrate them with your models. Some of the templates can be seen by clicking on the following links; 

• Fossil Fuel Electric Power Generation Excel Financial Model
• Oil and Gas Financial Model Excel Template
• Gas Station Business Plan
• Natural Gas Distribution Excel Financial Model
• Money-Transfer Gas Station Excel Financial Model Template
• Gas Station Pitch Deck Template

You can optimize your business operations by choosing us for your financial services. If you face challenges in launching your business, contact us for comprehensive support. Explore our portfolio to discover why numerous Micro-Small and Mid-sized Businesses consistently prefer our financial planning services. Once you embark on this journey with us, we assure you that success will be the only direction ahead.