Money
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[pic 1]SHOW ME THE MONEY! (REVENUE) 5. As you’re lling out your nancial model spreadsheet so that you can construct an Income Statement (remember: that’s the ul mate goal), you’ll want to make sure all the numbers are as accurate as possible. This means that we’ll need to dive a li le farther down the rabbit hole with regards to revenue. You’ll want to make sure you’re accoun ng for ALL possible revenue streams. For example—our co ee truck might also sell cups, t-shirts, or pastries. You’ll of course want to focus on your primary revenue stream (product or service), but it’s important to note the eventual evolu on of your business right away. Investors will want to know these details. Besides your primary revenue stream, how else will you make money? List all other possibili es and how much you expect to sell of each per year: Supplemental Revenue Stream #1— Example: I will also sell pastries. Addi onal generated revenue— Example: The average pastry will net me $1 pro t. Over the course of a year, at 20 pastries a day, I should expect an addi onal $7,200 in yearly pro t from the sale of these pastries. Supplemental Revenue Stream #2— Example: I will also sell t-shirts with my company’s logo on it. Addi onal generated revenue— Example: The average pastry t-shirt will net me $5 pro t. Over the course of a year, at one t-shirt a day, I should expect an addi onal $1800 in yearly pro t from the sale of these t- shirts. Supplemental Revenue Stream #3— Example: I will sell mugs with pithy sayings on them. Addi onal generated revenue— Example: The average mug will net me $10 in pro t. Over the course of a year, at two mugs a day, I should expect an addi onal $7200 in yearly pro t from the sale of these mugs. [pic 2]BUILDING YOUR INCOME STATEMENT 8. Eventually we’ll have you ll out a full version of this statement for you and your investors, but for now, you should already have on hand and understand some of the informa on to get started for projec ng year one. Use the numbers you already gathered in the previous ques ons to ll out the highlighted sec ons below (Need help? Check out the Video!): [pic 3]Note: salaries for personnel in each department will be in their respec ve department (CEO, nance personnel will be counted under G&A, sales and marke ng costs including salaries will be under S&M line). All ac vi es with crea ng the product and future products can be counted under the R&D expenses. [pic 4]YOUR INCOME AND PROFIT (ADVANCED) 9. As you move into year two and beyond, you’ll naturally expect to see increases in both your total revenue and gross pro t. Investors will want to know exactly how much you expect to grow your business, at what rate, and how you came up with these projec ons. How many widgets do you expect to sell in year two? Example: 70,000 cups of co ee. A er I become be er known, I’ll be able to put some money into adver sing which should at least double my revenue.

Year three? Example: 100,000 cups of co ee. Year four? Example: 150,000 cups of co ee. Year ve? Example: Holding steady at 150,000 cups of co ee. Now it’s me to invest in a second truck to increase brand visibility and explore other parts of the city How did you come to these conclusions? Example: I had a long conversa on with a co ee truck (Joe’s Mornings) that started in Lincoln, NE. They have a similar demographic customer base as I will have, as well as being located in a similar sized city as me. Their owner began at a loss in year one, just as I projected, but in year two they really started to see improvements in their revenue stream. If I follow a similar model, I see no reason why I couldn’t keep a similar pace. According to their books (they are four years old), they’ve nearly tripled their sales since their rst year. [pic 5]OVERHEAD COSTS (ADVANCED) 10. As you move into year two and beyond, you’ll also no ce a uctua on in your costs for running the business. You may not have those huge upfront costs that were necessary to get your business o the ground, but in the same breath, you may have higher salary costs, an extended marke ng campaign, or a new product or service that needs an input of cash to get started. Point? Your expenses are going to change from year to year. When pitching to an investor (or planning for yourself) you’ll need to have accurate and thorough projec ons for the evolu on of your expenses. Let’s start with a review of your rst year. What were your expenses for year one? Equipment— Research and Development— Salary— Rent— Marke ng— Addi onal— Total— What are your expenses for year two? (Do Research!) Equipment— Example: Zero. I won’t need any addi onal equipment in year two. Research and Development— Example: $5,000. I expect to have to make a trip to Guatemala the second year to see the new crop and nego ate prices with the small farmers. Salary— Example: $70,000.I will need an addi onal employee to keep up with increased sales. Two employees at $35,000 per year. Rent— Example: $13,000. Licensing fees for truck rentals in Tulsa are $13,000/year. Marke ng— Example: Zero. I s ll do not expect to do any marke ng in year two. Addi onal— Example: Zero. Total— Example: $88,000 Explain how and why you came up with these new numbers: Example: A er speaking with employees at co ee shops I found out that an average salary is around $35,000/year; a er talking with the chamber of commerce about licensing I found… What are your expenses for year three? (Do Research!) Equipment— Research and Development— Salary— Rent— Marke ng— Addi onal— Total— Explain how and why you came up with these new numbers: What are your expenses for year four? (Do Research!) Equipment— Research and Development— Salary— Rent— Marke ng— Addi onal— Total— Explain how and why you came up with these new numbers: What will be your expenses for year ve? (Do Research!) Equipment— Research and Development— Salary— Rent— Marke ng— Addi onal— Total— Explain how and why you came up with these new numbers:

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Addi Onal And Course Of A Year. (June 9, 2021). Retrieved from https://www.freeessays.education/addi-onal-and-course-of-a-year-essay/