Read: The Entrepreneur’s Field Guide: Financial Models found “FILES” folder on CANVAS.

Create and Document All of the Assumptions you are making with regard to the financial model, and then the justification for the numbers for each assumption.  Be sure to explicitly state your rational for each assumption as well as any references you can use to justify your assumptions.

Start with the assumptions for your sales forecast: (a) the client profile, (b) the total number of potential clients that fit the profile, (c) the proportion of clients that would buy your product/service, (d) how frequently they will buy, and (e) how much the will pay.

Next, document the costs involved in operating the business.  This includes: (a) all variable costs including cost of goods sold (COGS), shipping and handling, and labor, and (b) fixed costs.

Create and Document Your Model using a spreadsheet or the excel spreadsheet provided on CANVAS.  Be sure to customize (disguise) any template so that it appears to be your own.  That means changing the months to fit your business opportunity, hiding any row not used in your model, and changing or hiding expense categories that do not fit our model.

Finally, Create and Document the sources and uses of funding.  This section all funding needs and sources of financing to get the business off the ground.  This consists of identifying: (a) all costs in starting the business, (b) the type and amount of financing used for each of the areas that need funding.

The need for financing must be very specific as they will determine the types of financing available.  These may include hard assets, soft assets such as IP, research and development, market development, inventory, labor, and so forth.

Then, for each of these types of funding needs, identify the appropriate type of financing, including: (a) internally generated funds – bootstrapping, (b) debt, (c) equity – self, friends and family, angles, VC ore crowd funding, (d) government grants.

Create Business Report.  Using good business report formatting and layout, create and submit a report of your (a) financial model assumptions, (b) the financial model, and (c) sources and uses of funding.  Note, do not put the spreadsheet in the body of the report, rather put a summary of the spreadsheet in the body and the spreadsheet in an appendix.  The summary should include: Revenue, variable costs, gross profit, fixed costs, and net profit.  In a separate table summarize the cash flow.

Presentation: There will be a formal presentation including PowerPoint focused primarily of the assumptions but including the summary tables and the sources and uses of funds.

Grading will be based on the level of detail and justification for (a) the financial assumptions, (b) the financial model & summary tables, and (c) the sources


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