Most businesses have at least some seasonality to them. Perhaps the first quarter of every calendar year is always slow, or your business comes to a stand-still every November through December. Here is an example of a business that slows dramatically ever summer:
I have long suspected that most business people cannot give a simple definition for the common term of “business model.” It seems to be a nebulous and vague term that escapes most. Most people think they know what it means, but when you ask them to define it, they usually can’t come close to verbalizing it. So I decided to see if a group of business students, those who are in the great business textbooks every day preparing to succeed in business, know what it means.
In a classroom of a well-respected business school today I asked: “Please define business model.” I received the same initial reaction I do from most – some blank stares and a few who started to raise their hands but then realized they didn’t really have much to offer. Finally a brave soul took the plunge with something like this: “It’s the way a company runs and operates.” That sure seems to be part of it, but aren’t we missing something? A few more students offered suggestions that were similarly vague and generally lacking.
My definition is simple – a business model is how your business makes money. Period. It is the accumulation of all of the sales, marketing, operations, administration, R&D, finance, and everything else that goes into a business – all the strategies and tactics – that determine if the company makes money or does not make money. Most definitions are like the ones above – mentioning different parts of running a business but failing to describe it as the company’s overall plan for making a profit.
Understanding this simple and quick definition, here is my two-pronged philosophy for entrepreneurs and their business models:
First, every entrepreneur can pick whatever business model they want. Second, eventually our efficient market will determine the superior business model for each industry. Those who innovate the best model for their industry will most likely win. Those who quickly adopt to this model will likely survive. And those who stay entrenched in their out-dated and archaic models will die.
In our competitive business environment, the best entrepreneurs are the ones that innovate the best business models in their respective industries. I don’t know how many of them can give a quick and precise definition of the term business model, but one thing is for sure – they get it!
I have heard this statement more often than I care to admit: “I cannot predict the future so a budget would be worthless for my business.”
An article entitled How to Create a Budget in BusinessWeek prompted me to recollect some of my experiences with helping people who have the above attitude towards budgeting gain a new appreciation for the process and, more importantly, the results the process can generate.
I have and will continue to make this guarantee to any business in any industry anywhere in the world: if you follow the “best practices” steps to creating a financial plan and operating budget for the next twelve months and you track your monthly progress against that plan, you will know more about your business than 80% of your competitors know about theirs.
Why can I make that promise? Because the things learned in that twelve months are so revealing in terms of the most effective business model and other competitive advantages that the company cannot help but begin to develop and implement the right strategies for making the business more successful.
Why do most businesses fail to implement this process? I have found that the two main reasons are lack of discipline and lack of resources. This process requires a great deal of disciplined time, including the discipline to review your results against your budget EVERY month. The budget is worthless if we do not do this. The focus of this monthly analysis should be on the variances in the budget. We need to know WHY we varied from our budget. What can we learn from that? What can we change to improve our performance in that area?
Some companies lack the resources to be able to analyze their historical data and then easily track their progress. Perhaps they do not have an accounting system in place, or perhaps they do not have anyone that knows how to properly operate their system. The accuracy of the numbers is certainly a critical element to making the budgeting process a successful experience. So, having the right staff and a functioning accounting system are critical to this process. Even QuickBooks allows its users to enter in budget information and then run reports to track the monthly progress and variances.
If anyone reading this post doubts me, I challenge you to try it for 12 months. In my experience as a part-time CFO for many emerging companies, the value derived from our busgeting process and reports has improved the bottom-line dramatically. I think you’ll experience similar results.
This is a real situation experienced by a real emerging company. Names and figures have been altered to protect anonymity.
A company has a new opportunity and they create a financial model to try and forecast how their general assumptions for this opportunity will materialize. Specifically, they made significant assumptions about the direct labor costs of the opportunity based on the historical performance of their other product lines. Less than two months into receiving real data against which they can either validate or invalidate our assumptions, they began receiving feedback that the employees were under-paid and that their competitors had better compensation programs available. How was this missed in the model?
First of all, let’s be clear that this is not the first or last time something has or will be missed in a financial model. They are based on assumptions, not fact, and, therefore, are subject to error. The most inaccurate assumption made was that the number of units per direct labor cost was off by a large margin. We could break it down to show that on average during the first 2 months 1.33 units were produced per person per day. The model assumed that a minimum of 2 units would be produced per day. With a piece-rate structure to the compensation program, this meant the employees of the company were taking home about 1/3 less pay for the same amount of work as the company’s other products.
This company quickly made adjustments to the business model, and realized that even with a change in the production rates the new opportunity would be very profitable. As such, they changed the compensation program, the employees were happy again, and the company is profiting from their new product line.
So, what take-away can we gain from this story? Labor is almost always one of the two most expensive inputs into a business. It, unlike any other asset of the firm, is often the most critical of all of the inputs. If we want the best output, then we need to make sure to help our employees win within the structure of our business and financial model. If our employees cannot win in a model that helps only the company win, then the company should not pursue the opportunity. Small business financial help is available for companies that need guidance in building their financial and business models around their people.
A financial model and an operating budget are two different things, but the two should correlate with and complement each other. I’m going to briefly discuss the differences, what each is used for, and how to use them both more effectively to run and improve your business.
THE DIFFERENCES
Financial modeling/forecasting usually takes a big-picture approach and avoids too many details. The model is used to assess opportunities and the cause and effect of major business decisions. The model is often expressed in terms of yearly performance.
An operating budget, in contrast, is mired in the details. It needs to tie directly to the accounting system’s general ledger, or chart of accounts for QuickBooks users, and is usually a month-by-month forecast of the activities of each account for the next 12 to 24 months. Use of the operating budget includes analysis of the budget vs. actual performance each month.
HOW & WHY SHOULD THEY CORRELATE?
A business needs to have both a financial model and an operating budget. An operating budget without a long-term model/forecast leaves a company pretty directionless and lacking the ability to understand the impact of business decisions on financial performance. A financial model without an operating budget is a “pie-in-the-sky” dream that is not founded in reality. There is no way to track progress towards accomplishing the goals and objectives, if they are even outlined, and it is almost impossible to hold anyone accountable. Every business should have both.
The place where many companies go wrong is that they do not actively use both of them and ensure they “feed” into one another. For example, let’s assume we have modeled $5,000,000 in sales for 2009 but our operating budget calls for $3,500,000. This discrepancy is large and invalidates one, the other, or both!
The operating budget needs to validate and complement the assumptions made in the financial model, and vice-versa. In fact, the monthly review of the budget vs. actual performance can often generate valuable information about our assumptions and can justify changes and updates regularly to the financial model.
For example, let’s assume we project a 50% gross profit in our 5-year financial model. Due to changes in the economy, increasing material prices, and a slight change in mix of products, our gross profit is coming in every month at 45%. We find and track this in our operating budget analysis each month. Since the trend seems to be consistent, we may make a decision to update the gross profit assumption in our financial model.
CONCLUSION
With an understanding of the differences between a financial model and operating budget, we can see the need to bridge the gap between the long-term planning and short-term budgeting so that they complement each other. While this requires some effort and often the expertise of a full or part-time CFO, the result is always a competitive advantage in terms of a more effective execution of our business model. That means more cash flow and better profitability that your competitors, which results in a sustainable competitive advantage.
Every sensible financial model projects the results of all three major financial statements – the profit & loss, balance sheet, and statement of cash flow. The balance sheet, not the profit and loss, is what drives the cash flow of the business. If the balance sheet is not correctly modelled, then the cash flow forecast is most likely inaccurate and worthless. Yet the balance sheet is the part of the model that is usually the most neglected and least understood.
In order to help get the balance sheet forecasting correct, we have identified three common mistakes that entrepreneurs, CEOs, business owners, and even business financial consultants make: NO balance sheet projections, failure to correlate operating activities on the P&L to changes in the operating assets and liabilities on the balance sheet, and disregard for the debt and equity transactions of the firm.
BALANCE SHEET IS MIA
The most common mistake made is the exclusion of a balance sheet forecast from the financial model. The balance sheet represents the most complex transactions of the company and may be left out of the model because the company lacks the expertise of a CFO or a CFO firm to assemble this critical part of the model.
CORRELATION OF OPERATING ACTIVITIES AND OPERATING ASSETS AND LIABILITIES
The major operating assets include accounts receivable, inventory, pre-paid items, and more. The major operating liabilities include accounts payable, taxes payable, and other accrued expenses. When sales go up, accounts receivables go up, and cas goes down. But does the model capture that? If sales go up, can we expect our inventory level to stay the same? Most likely it will need to increase. The increments of these changes are dependent upon the relationship between our days sales outstanding and our inventory turnover.
As sales increase, our accounts payable usually increase as well. The timing of our payments against our accounts payable is a major outflow in the cash flow puzzle that is called working capital. We need to define the relationship that payables have with our operating activities and implement this relationship in our balance sheet model.
There are several other operating assets and liabilities that dramatically impact cash flow. We will avoid all of the details of each, but it is fair to say that without properly forecasting them, our cash flow forecast will never be accurate.
DEBT & EQUITY TRANSACTIONS
Are we bringing in any more equity investments during the period we are modelling? What is our dividend policy for shareholders? Is some or all of the active shareholders compensation coming through equity? All of these items can have a significant impact on cash flow, although none of them show up on the P&L.
In addition to equity transactions, the structure of all of the company’s debts and obligations need to be correctly reflected on the balance sheet. An interest only line of credit will keep the same balance until more is withdrawn or some is paid back based on the cash flow of the firm. Term loans need to show the correct amount of principal being reduced every month.
Obviously these items can seriously change our cash flow, and they need to be included in the financial model so we can correctly forecast our cash flow.
CONCLUSION
This list of common mistakes is certainly not comprehensive (you’ll notice we did not address capital expenditures at all), but should create a positive foundation to build the balance sheet model. Our CFO services firm has built hundreds of complete financial models that have helped our clients get a handle on their companies, make the best strategic decisions possible, raise necessary capital, and perhaps most importantly, track their progress so they can correct problem areas and make more valid assumptions in the future.
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A good financial model should feed into three main pages, which happen to match the three main financial statements of a business – profit & loss, balance sheet, and statement of cash flow. These three components of the model should never be circumvented nor should we ever try to short-cut the need for all three.
With these three pro forma statements as the final deliverable, there are at least three additional worksheets that need to be part of the model. They include assumptions, marketing/sales/COGS, and payroll.
ASSUMPTIONS
Every working financial model should have one page that contains a majority of the assumptions for the model. Assuming we are using Excel or another spreadsheet template to create the model, these assumptions should be linked throughout the model. This gives us the ability to make a change to any one of our assumptions and then see how that changes our profitability and cash flow outcomes.
MARKETING/SALES/COGS
We need detail! It is not sufficient to say we are going to grow sales by 50%. What are the marketing activities that will drive that growth? How many leads will we need to generate a sale? What is the cost of these leads and other marketing activities? Which product or service lines will grow more than others? How does our gross margin differ on these lines as compared to slower-growth or even obsolete lines? Is there a difference in both the collections and the payment for costs of goods sold between these lines? How will this impact cash flow? These are the questions we look to this worksheet to answer.
PAYROLL
How many people is it really going to take to accomplish what out financial model projects? What are the salary and wage costs to hire all of these people? Are our hiring practices in line with the sales per employee financial ratio according to our industry benchmark? Have we correctly factored in all payroll burden and benefit costs, including FICA, FUTA, SUTA, worker’s comp, other state payroll taxes, health insurance, 401(k) match, etc.? Have we correctly forecast all of the costs associated with adding these new employees, including recruiting, HR, and new office and computer equipment? These need to be factored into our plan so that we can demonstrate a realistic cost for growing our firm.
While there are many other supplemental worksheets that may be used to help build a formidable working financial model, these three are a requirement. We either need to create and maintain this model ourselves, or we need to look to finance and strategic planning professionals like those who fill the CFO job for either one company or for many companies in the capacity of part-time CFO.
Most of the folks who read our blog know we write from the CFO advisor perspective on start-up, emerging, and medium-sized businesses. This post will be no different, and its intent will be to clarify the two most significant flaws entrepreneurs, business owners, and CEOs experience when trying to understand their break-even point, both in terms of sales volume and units.
FLAW #1 – OWNER COMPENSATION
The traditional method for calculating break-even requires us to separate the fixed and variable costs. These come from the profit & loss statement, or statement of operations. Often a significant portion of the active owners’ compensation, meaning the “wage” for their time and effort working in the business day-to-day and excluding profits and dividends, is pushed through the balance sheet for tax purposes. Specifically, an S-corp often pays a reasonable salary to the owners to meet IRS requirements and also has a regularly scheduled distribution to make up the difference.
Here is an example. Let’s assume a business that is structured as an S-corp has one owner who requires $150,000/year to pay her bills and do the things she wants and needs to do. She is advised by her tax advisor to only pay herself $90,000 as a salary. This flows through the profit & loss and will be included in the break even analysis. She is additionally advised to take the other $60,000 as a dividend to avoid unnecessary payroll taxes. So she schedules a $5,000/month dividend to herself and counts on that not as a distribution of profit but as her regular and expected wage. The challenge is that this $5,000/month flows through the balance sheet and is not part of the break-even calculation, even though it is, for all intents and purposes, just like a fixed cost.
The way to solve this is to add another $5,000 per month to the fixed cost total for running the firm each month. This will being the break-even calculation to a more correct place.
FLAW #2 – DEBT PAYMENTS
Another fixed outflow of money that is often missed in the break-even calculation is reduction of the principal balance of outstanding notes and loans. The interest portion of all debt payments shows up on the profit & loss and should be part of the fixed costs of the break-even calculation. But the principal only flows through the balance sheet.
In some cases the amount of depreciation being recognized as a fixed cost is about equal to the principal reduction, but often it is not. For example, we are the part-time CFO for a business that is paying an extra $3,000 per month towards one of their equipment loans. The owner has set this as a requirement that the business must meet every month. When this owner thinks about break-even, she is hoping that this extra $36,000 of principal reduction is considered. In addition, she is also hoping the fixed dividend of $6,500 she takes every month from the company is included as well.
CONCLUSION
Hopefully you picked up on the place where break-even flaws occur – transactions that only hit the balance sheet. In some ways, start-up, emerging, and medium-sized companies need to look very closely at both their operational break-even and their cash flow break-even to truly understand the minimum level of sales they can experience and still stay at a break-even from a profitability and a cash flow perspective. Business finance textbooks teach only operational break-even and they fail to mention the inherent flaws to its calculation.
What good is knowing your break-even? Besides the clarity and peace of mind it will bring, it can become essential in helping you price your products and services and help you refine your business model to its most efficient and effective state. There is a power in being able to say: “We need to sell 100 units to break-even this month.” By correcting your break-even calculation for these issues, the clients for whom we serve as CFO consultants can express their break-even with great confidence!
How many forecasts do you keep concurrently in your company? If the answer is zero, then we have some serious work to do. But if your answer is one, you may be falling well short of what is necessary in these difficult economic times.
Here is a real story of a conversation I had with a banker in the last 6 months about a client of our CFO firm. My client needed to finance some heavy growth and we stretching to try and use only bank financing to accomplish this growth. The banker was concerned about the effects that our plans for growth could have on the business.
He said: “Ken, I have your projections in front of me, and I understand they are conservative, but I’m not going to feel comfortable about this deal until you can show me convincingly that a 25% downturn in this company’s top-line will not kill this company.” I agreed to re-work our forecasts based on his request, and I went ahead and ran an additional model with 25% additional growth on top of the already projected growth trends. In about two hours we went from one forecast to three, and the exercise was overwhelmingly valuable.
In the July/August issue of CFO Magazine, Tenet Healthcare CFO Briggs Porter said: “Developing a plan on three different levels (baseline, high, and low) is a good idea in any environment, but it is a necessity in this one.” I could not agree more with this statement. Forecasting is tough enough, but these uncertain times make it even more difficult. And the stakes are high – if you fail to plan for each scenario, you can quickly put the company in a world of hurt.
Financial modeling and forecasting is an exercise that ultimately only proves beneficial if we use the models and forecast to validate or invalidate our assumptions, make necessary and timely changes in our businesses, and continue to try and stay ahead of the where we are going. In large organizations, the CFO usually runs and updates the model. Those without a full-time CFO can access CFO services from a CFO advisor or CFO consultant that specializes in helping many companies create and then use their model effectively.
I have and will continue to make this promise to anyone willing to take this challenge: If you will put a forecast/budget in place and track your actual performance next to your budgeted performance every month for 12 consecutive months, you will know more about your business and industry than at least 80% of your competitors and the competitive advantage you gain from the insights and knowledge you will gain during this process will add an overwhelming amount of value to your business.
Utah CEO Magazine quotes Ken Kaufman in their article on, “Pricing Goods and Services in a Recession”.
PLEASANT GROVE, Utah, June 6, 2009 - CFOwise is proud to announce that its Founder & CEO, Ken Kaufman, was quoted several times in a recent article published in the Utah CEO Magazine and written by Heather King.
CFOwise founder Ken Kaufman commented on this great exposure by stating the following, “The Utah CEO Magazine is a great resource for CEO’s operating in the Utah area. The information provided in this article and throughout the magazine is valuable and indispensable to CEO’s.”
This article in particular provides Owners and CEO’s the information that they need in order to effectively price their goods and services during the recession we are in. Ken Kaufman was quoted in the article saying, ” If a company is going to change their pricing, they have to recognize that it is a business model change and they have to go through and figure out what the impacts are going to be from a profitability standpoint, a cash flow standpoint and then from a competitive standpoint.”
About CFOwise
With over two centuries of senior-level executive experience, CFOwise is the premier provider of permanent part-time CFO services to start-up, emerging, and medium-sized companies in the United States. For more information, please visit: www.cfowise.com or contact Kim Waldron at 801-380-5615.
About Utah CEO Magazine
The Utah CEO Magazine can be summarized in their Editorial Philosophy, “Robust business is good for everyone, and creating that environment starts with our readers – Utah’s business elite. Our purpose is to provide information to help those business leaders navigate through challenges and seize opportunities. By consistently offering superior content, Utah CEO supports the immediate goals of Utah’s businesses while encouraging forward thinking to sustain the momentum. Outstanding ideas are at the core of a viable business culture, and Utah CEO keeps an ear to the ground for those outstanding ideas.” The content in Utah CEO is designed to serve a business purpose first, not just entertain. For more information please visit: www.UtahCEOmagazine.com .
You have gone through the painstaking effort of creating a formidable business plan for your enterprise. Now, what do you do with it? The answer – use it at least monthly to run your business!
After investing thought and time into the business plan, the biggest question mark that still remains centers around the assumptions we have made concerning sales, margins, and cash flow. It is imperative to validate or invalidate our assumptions with our actual performance.
If we assumed our sales would grow by 5% each month, are we actually hitting that number? Are we higher or lower than it? Why? Is our sales cycle taking longer or shorter to complete? Are we hitting our conversion assumptions? The result of actually tracking our sales performance relative to our assumptions will generate two results: first, we will be able to hold our organizations accountable, and, second, we will more clearly understand our sales process and empower ourselves to make better assumptions in the future.
There are many valuable results that we will realize if we use our business plan at least once per month to help us run and grow our business.
You had to do it. You had more staff than work, and your cash flow was not going to be able to support everyone you had hired for much longer. You gear yourself up and let some of your closest friends and colleagues go. Then you realize your most difficult job still lies ahead – retaining your remaining staff and their morale!
After reading Leadership After Layoffs I thought about the many companies that have laid off or will need to lay off employees. There has been and will be a lot of material written on how to communicate with the remaining employees after the layoff. But far too little is written on the need to formulate a financial plan to survive the layoff and return to prosperity.
Does the CEO really see how the layoffs will solve the company’s cash flow and profitability issues? Can he/she confidently explain to the remaining staff why these cuts were just deep enough but not so deep that the company’s hallmark way of taking care of its customers will not be in jeopardy?
With a sound and reasonable financial model that accounts for the “before” and “after” effects of the layoff, a business owner, entrepreneur, or CEO will be able to communicate with honesty, transparency, and confidence. A leader should have the financial model/plan in hand when he/she meets with the remaining employees. The leader should be able to say something like this: “If we can realize at least $50,000 per month in sales for the next 12 months, we will not have to make any more changes in staffing.”
Such communicating will begin to rebuild the trust of the remaining workforce who just saw their friends and colleagues escorted from the building. If the leader fails to communicate specifics and refers to the future performance of the company in vague terms, the employees will continue to lose their trust in the company. Productivity and morale will drop and the company’s chances for survival become much less realistic.
It is my experience that when a company has a sound financial plan for rebuilding the company after a layoff, the productivity and morale of the remaining staff actually increase. This improves the firm’s chances for success and helps its comeback as a leaner, meaner, and more nimble firm that adds even more value to its current and future customers.
If you are in need of a financial plan, call one of our part-time CFO’s today.
Entrepreneurs and business owners often ask and wrestle with this question. We need to consider your replacement income, your monthly “nut,” and your entity’s tax strucutre to begin to answer the question.
The first factor to consider is the cost to replace your position in the company. It is very important to not confuse business ownership with business employment. If you are the President and CEO of the company, then what are Presidents and CEOs of other companies like yours earning as a salary/wage every year. Again, please separate ownership from wage. In most companies the entrepreneurs tend to under compensate themselves relative to their peers, mainly because they are in what is called “cheap labor, high productivity” mode.
Next we need to consider what you need personally to survive. I listened to a successful entrepreneur give a 30-minute speech about 6 months ago and I had one major take-away. He articulated that entrepreneur’s need to make sure they are making enough to pay their personal bills and cover their personal expenses in order to be the most effective at growing their companies. If all we are ever concerned with is how are we going to feed our family next week, the business suffers.
With these two factors under consideration, we should be able to arrive at a reasonable and fair compensation plan. Maybe it is $50,000 per year, or maybe $100, 000, or more. If the number is higher than the company can afford, then we need to figure out how to get the company to where it can afford to fairly compensate the entrepreneurs and owners. If the business will never be able to feasibly afford them, then we may need to consider drastic alternatives – like starting another business or re-entering the workforce where we can receive compensation commensurate with our contributions to a company.
The last consideration is how to receive the compensation. Your company’s tax classification will best determine this. Please check with your tax adviser before implementing any of these strategies. If you are a sole-proprietorship or a dis-regarded entity filing on schedule C of the 1040 form, then you just pull money out of the business at regular intervals, or you can pay yourself as an employee, or some combination of both. All of your earnings will be subject to self-employment tax. If you are taxed as a partnership (Form 1065) then you will most likely have to pay self-employment tax on all of your earnings. Hence, you can select any of the forms of payment mentioned for sole proprietors, the only difference being that profit distributions will most likely be treated as guaranteed payments. If you are taxed as a C-Corporation, then you must take a w-2 wage and you may be able to loan yourself some of your compensation. If you are taxed as an S-Corporation, then you will most likely receive a portion of your compensation as an employee and a portion as a distribution (which is not subject to self-employment tax).
In conclusion, a fair and reasonable wage for the entrepreneurs is a critical part of the business plan and should be reviewed regularly. If you seek financial help for small businesses, please feel free to contact us.
INTRODUCTION
“Creating a solid financial model and using it to run your business is one of the fundamental actions required to build a successful business.” Assembling the dynamic and fixed parts of the financial structure of a business creates a powerful tool – a financial model. However, failing to use it to run and improve your business renders it powerless. We hope to briefly discuss some of the benefits that may come if you discipline yourself to participate in and regularly revisit this exercise.
WHY CREATE THE MODEL
Here are the words of a budding entrepreneur: “I had a mentor who sat me down and built a financial model for me. He asked me, ‘How many days does it take to do this? How many people does it take to do that?’ Building on the answers to those and many other questions, he was able to predict the company’s future several years down the line, a big plus in meeting with venture capitalists” (“Speaking From Experience,” Entrepreneur.com, 11 Jan 2008). Your model can help you see years into the future and help you appropriately capitalize your business.
FORECASTING THE FUTURE
I know a lot of business owners who see no value in trying to understand the future because, as they might say, “I don’t know what’s going to happen in the future.” While their statement is probably true, it fails to consider that forecasting the future empowers them to make the best decisions as the future becomes the present.
For example, I serve as the part-time CFOof a company that saw a decrease in its sales in 2007 of 21%. The firm’s financial model helped the owners maneuver through its unforeseen internal and external challenges, tweak part of their revenue and cost structure, and still have a very profitable year. More importantly, the firm will, as a result of its corrections in 2007, increase sales in 2008 by at least 44% and reach an entirely new level of profitability. Without their financial model as a guide, they would have lost money in 2007 and would be struggling to return to a break-even status in 2008.
VIABILITY AND CREDIBILITY
You will struggle to receive debt and/or equity financing if you do not have a firm grasp of your financial model. Lenders, angel investors, venture capitalists, and often friends and family want to see the financial model and understand how it works. They will ask questions about your assumptions and may want to look at your historical performance to validate your claims. Your model will also clarify the amount of external money required, your intended use of the funds, and the repayment period or return on investment your financier can expect.
CONCLUSION
Having helped our clients raise over $15 million in debt and equity financing in 2007, our CFO firm has found one thing constant in every deal – a sound financial model built on realistic assumptions. Regardless of if you need to raise money to take your firm to where you want it to go, having a financial model will help you run and improve your business. If you use it correctly, your model will be a driving force in your success.