BU121 Lecture 7: Entrepreneurial Finance
Document Summary
For all start ups: sales forecast, headcount, expenses, and breakeven cash flow. Unique metrics: gross margin, inventory turns, occupancy, and qualified leads. Creation and capture of value: customer acquisition costs vs lifetime customer value, revenues per salesperson and time to revenue, contribution margin, monthly burn rate. Can you capture the value you"ve created. Can you sell enough to breakeven and achieve financial performance. No formula where projects are based on research and logic = educated guess you can defend. Market potential does not equal sales forecast: forecast depends on plan called scalability. Top down forecasting: market potential not just number of households, still doesn"t equal sales forecast so consider the geographic market operating in and seasonality or read to buy. Bottom up forecasting: what can you do given capacity and marketing plan. Sensitivity analysis and contingency plan: assumptions: Capacity: milestones is the points that increase valuation of business and need for capital so contingency plan.
