BU121 Lecture Notes - Lecture 7: Contribution Margin, Sensitivity Analysis, Cash Flow
Document Summary
What tool do you have that would help me make a decision? (why: look at the wording. How do i interpret the answer/use it to make a decision? (how: see if the numbers are realistic, look at breakeven and how to reduce. For all startups: sales forecast, headcount, expenses (fixed + variable), breakeven cash flow. Unique metrics: gross margin, inventory turns, occupancy, qualified leads (internet business, don"t want things to go obsolete, if you"re not looking at the qualified leads, only looking at views won"t help. And how much it to keep them: revenue per salesperson and time to revenue (how much am i paying them?, contribution margin, monthly burn rate. *importance of how you measure your business aside from the accounting side. No formula projections based on research and logic = educated guess so you can defend: need to build trust for your investors to lend you the money.
