Revenue Models
Download as PPT, PDF1 like197 views
This document provides guidance on creating financial projections and models for a new business. It emphasizes using a bottom-up approach by calculating projections based on key assumptions and market data rather than top-down industry averages. The document outlines steps for gathering industry reports, segmenting the target market, determining costs and team size needs, and providing an example projection for an acupuncture business targeting women in Miami that projects $48 million in annual revenue by year 5.
More Related Content
Viewers also liked (12)
Similar to Revenue Models (20)
Revenue Models
- 1. Revenue Models The Founder Institute Presented by: Nestor Villalobos
- 2. Common Mistake DO NOT CREATE PROJECTIONS USING A TOP DOWN APPROACH!!!! ONLY CALCULATE PROJECTIONS USING BOTTOMS UP
- 3. Pull Key Industry Reports ? IBIS, Hoovers, Dun & Bradstreet ? Universities have Access ? Ask Other Businesses ? Ask Me
- 4. Financial Modeling (Con¡¯t) ? Separate Key Assumptions Page ? Conservative Market Penetration Numbers ? 5 Year Projection Calculated Monthly ? Income Statement, Balance Sheet, Cash Flow ? Break Even Analysis
- 5. Gather High-Level Data Points ? Market Size ($13.9b) ? Avg. Net Margin (Profit/Revenue = 12%) ? Annual Growth (4%) Industry: Alternative Health Care Segment: Acupuncture
- 6. Market Segmentation ? Understand your Segment ? Don¡¯t Calculate Market Size Based on Totals ? Assuming Acupuncture = 3.6% of $13.9b = $500m
- 7. Industry Costs ? Profit ? Wages ? Purchases ? Depreciation ? Marketing ? Rent & Utilities ? Other
- 8. Modeling Assumptions for Every $1m in Revenue: ?Profit = $119,000 ?Wages = $493,000 ?Purchases = $91,000 ?Depreciation = $17,000 ?Marketing = $54,000 ?Rent & Utilities = $58,000 ?Other = $168,000
- 9. Total Addressable Market US Population = 322,267,564* Total 30 ¨C 69 Year Olds = 50.2%* Total Women in Age Group = 80,566,000 15% of Women in the U.S. Have Bachelor Degrees* 84.7% of Women Do NOT Smoke* Therefore about 10,000,000 women = TAM *Source = Wikipedia
- 10. Revenue Projection ? Base Revenues DIRECTLY on Customer #s & Markets ? 10,000,000 Women TAM (All United States) ? Miami = 2.617m Residents OR 0.08% of Total Pop ? Target Market in Miami = 80,000 Women ? Average Acupuncture Price = $80.00 ? Avg. Visits/Year = 2 ? Total Miami TAM = $12,800,000 (2.5% of TAM $500m)
- 11. Team Size ? How to calculate team size & cost? ? Alt. Healthcare Industry = $50,0000 Rev. Employee ? For every $1,000,000 in Revenue Need 20 Employees ? Avg. Employee Wage of $24,960 = $499,200 for 20
- 12. Competitor Analysis ? Average Competitor Size: Revenue/Enterprises = $63,960 average competitor revenue/year. Means lots of small players in the industry.
- 13. Projections Rev/Emp. Sessions/Cust. 2 # of Emp. Yr 1 19 $50,629 Average Price $80 # of Emp. Yr 2 95 $50,629 Market Size $500,000,000 # of Emp. Yr 3 190 $50,629 Avg. Emp. Wage $24,960 # of Emp. Yr 4 379 $50,629 Total Customers 10,000,000 # of Emp. Yr 5 948 $50,629 Year 1 Year 2 Year 3 Year 4 Year 5 # of Customers 6,000 30,000 60,000 120,000 300,000 Cust. % of Tam 0.06% 0.30% 0.60% 1.20% 3.00% # of Sessions 12,000 60,000 120,000 240,000 600,000 Rev. Mkt. Share 0.19% 0.96% 1.92% 3.84% 9.60% Annual Revenue $960,000 $4,800,000 $9,600,000 $19,200,000 $48,000,000 Wages 49.3% $473,280 $2,366,400 $4,732,800 $9,465,600 $23,664,000 Purchases 9.1% $87,360 $436,800 $873,600 $1,747,200 $4,368,000 Depreciation 1.7% $16,320 $81,600 $163,200 $326,400 $816,000 Marketing 5.4% $51,840 $259,200 $518,400 $1,036,800 $2,592,000 Rent & Utilities 5.8% $55,680 $278,400 $556,800 $1,113,600 $2,784,000 Other 16.8% $161,280 $806,400 $1,612,800 $3,225,600 $8,064,000 Profit 11.9% $114,240 $571,200 $1,142,400 $2,284,800 $5,712,000 Assumptions Employee Planning
- 14. Angel Capital? If seeking angel capital, due to risk/return need a ¡°Hockey Stick¡± projection achieving at least $20m in sales by Yr. 5
- 15. Contact Information Nestor Villalobos nes@nestorv.com www.nestorv.com (LinkedIn) www.nestorvillalobos.com (Blog)