What to Include
This section outlines the expected financial performance of the business for the next 3-5 years, providing investors with an understanding of the potential return on investment and the sustainability of your business model.
Core Elements:
- Income Statement: Revenue, costs, and profits over a set period.
- Cash Flow Statement: How cash will flow in and out of the business.
- Balance Sheet: A snapshot of assets, liabilities, and equity.
- Break-even Analysis: When the business will become profitable.
- Unit Economics: Key metrics like Customer Acquisition Cost (CAC) and Lifetime Value (LTV).
- Scenario Analysis: Provide base, optimistic, and pessimistic financial forecasts.
- Headcount Plan: Projected growth in staff as the company scales.
Where to Source the Information
- Internal financial models: Past performance, if available.
- Industry benchmarks: Average revenue, cost structures, and growth rates.
- Market research reports on your industry or sector.
- Consultation with financial advisors or accountants for proper model setup.
How to Analyze
- Revenue Model: Map out revenue assumptions based on customer acquisition strategies.
- Cost Structure: Identify key fixed and variable costs (e.g., salaries, marketing spend).
- Break-even Point: When revenues exceed fixed and variable costs.
- Cash Flow: Plan for positive cash flow and any funding gaps (e.g., need for bridge rounds).
- Sensitivity Analysis: Show how projections change with variations in key inputs (e.g., customer growth, marketing spend).
Format and Structure
- Financial Statements: Present in tables (Excel or CSV format) with key figures.
- Graphs & Charts: Visualize the financial trajectory (e.g., line graphs for revenue, pie charts for cost breakdown).
- Narrative Analysis: Brief explanation of key assumptions and insights.