5 examples of business / financial models in Excel
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This presentation will help you drastically improve your knowledge and skills in creating business / simplified financial models in Excel for 5 type of businesses 1. Retail 2. E-commerce, 3. Consulting 4. Restaurant chains 5. FMCG / SMCG – using the example of factory producing hand made clay. The presentation is based on my 12 years of experience as a consultant in top consulting companies and as a Board Member responsible for strategy, improvement and turn-arounds in biggest companies from FMCG, SMG, B2B sector that I worked for. On many occasions I had to build business models in in Excel in order to estimate what is the value of the business and find ways in which I can improve it. Business models are also useful for internal purposes: planning, looking for opportunities, analyzing performance, business development.
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5 examples of business / financial models in Excel
- 1. 1 5 examples of business / financial models in Excel Practical Guide how to check whether your business makes sense
- 2. 2 Business modeling is about capturing the logic of the business via main KPIs and modeling this in Excel. # transactions Average revenue per transaction Total revenue x % Fee of the marketplace Average transaction value Total searches % conversion x x Total Costs Total margin - Rent People Cost of traffic Ratio of visitors to searches Average cost of 1 visit + x Development
- 3. 3 SaaS E-commerce Media site 2-sided market User Generated Content Mobile Applications Retail B2C Service B2B Service FMCG SMCG Commodity There are 6 offline business models and 6 online models
- 4. 4 SaaS E-commerce Media site2-sided market UGC B2B Service B2C ServiceRetail Bear in mind that big companies can operate many business models
- 5. 5 Retail In this presentation I will show you business / financial models of 5 type of businesses Consulting Business E-commerce Restaurant Company selling hand made clay goods
- 6. 6 Thanks to this presentation you will learn how to model businesses in Excel and how to draw the right conclusions
- 8. 8 Retail sounds very simple. You have to get the right stock in front of the right customers at the right moment
- 9. 9 Yet there are some issues that simple make it difficult in execution You have many segments of customers Their come with different missions Product Range is huge Demand is very erratic / seasonal Your supply chain is very complex
- 10. 10 Below you will find things that you have to concentrate on Retail Margin Management Stock / Inventory Management Multichannel Strategy Managing price across channels Expansion to new markets Saturation of existing markets New product development Managing customer experience across channels Format evolution (possible death) People rotation and knowledge management Disruption esp. from external forces / business models Automation
- 11. 11 Before we move to Excel model we have to identify and connect main KPIs. We start by estimating the total sales of Stores. That depend on average transaction value (ATV) and the number of transactions # Transactions Average Value Transaction Total store revenue x
- 12. 12 We can estimate the number of transaction using the number of visits and conversion rate # Transactions Average Value Transaction Total store revenue x # of Visitors % Conversion x
- 13. 13 Average Transaction Value depends on the average value of basic purchase as well as some suggested purchases (i.e. suggested products) # Transactions Average Value Transaction Total store revenue x Average Value Transaction of basic purchase Average Value Transaction of additional purchase # of Visitors % Conversion + x
- 14. 14 If we have the % Gross margin we can use it to estimate the total gross margin generated by stores # Transactions Average Value Transaction Total store revenue x Average Value Transaction of basic purchase Average Value Transaction of additional purchase # of Visitors % Conversion + x % Gross Margin Gross Margin generated by the store x
- 15. 15 The last piece is getting the fixed costs (esp. rent and people # Transactions Average Value Transaction Total store revenue Total store costs x Store EBITDA Average Value Transaction of basic purchase Average Value Transaction of additional purchase # of Visitors % Conversion Rent People + x Others + % Gross Margin Gross Margin generated by the store x -
- 16. 16 We can also show what drives rent and salaries costs # Transactions Average Value Transaction Total store revenue Total store costs x Store EBITDA Average Value Transaction of basic purchase Average Value Transaction of additional purchase # of Visitors % Conversion Rent People # of People Average wages + x x Others + # of sq. m Fee per sq. m x % Gross Margin Gross Margin generated by the store x -
- 17. 17 Now it is time to transform it into a model in Excel # Transactions Average Value Transaction Total store revenue Total store costs x Store EBITDA Average Value Transaction of basic purchase Average Value Transaction of additional purchase # of Visitors % Conversion Rent People # of People Average wages + x x Others + # of sq. m Fee per sq. m x % Gross Margin Gross Margin generated by the store x -
- 18. 18 For more go and check my online course. You will find there the model in Excel Retail for Business Analysts and Management Consultants $90 $15 Click to check my course
- 19. 19 As well as presentation on Slideshare Retail for Business Analysts and Management Consultants A practical guide presentation
- 21. 21 Consulting is a service company. Service companies in general are all about converting your workers time into money Man-hours
- 22. 22 There are plenty of challenges in consulting business that you have to face Utilization of people People rotation and knowledge management Upsell and cross-sell Seasonality of Demand Optimizing Capex and Opex Automation Standardization of services Price Discrimination Capacity management Productization of services Growing new businesses using customer base Minimizing and Managing Fixed Costs
- 23. 23 The typical model of a service model can be presented using this logic ▪ % Utilization# hours available # of billable hours Revenues Gross Margin Operational Profit Net Profit ▪ Hourly fee ▪ HQ costs ▪ Bonuses ▪ Interest ▪ % Gross Margin ▪ Wages
- 24. 24 For more go and check my online course. You will find there the model in Excel Start and Run a successful consulting business $190 $15 Click to check my course
- 25. 25 As well as presentation on Slideshare Start and run consulting company A practical guide presentation
- 26. 26 Business model of e- commerce in Excel
- 27. 27 Before we go to Excel let’s talk about the logic we used to build the e-commerce Excel model ▪ Conversion rate Visits # of transactions Revenues Gross Margin Net Margin Operating Profit ▪ ATV ▪ Cost of traffic ▪ Cost of logistics ▪ Transaction fees ▪ Fixed Costs ▪ % Gross Margin
- 28. 28 Now it is time to transform it into a model in Excel ▪ Conversion rate Visits # of transactions Revenues Gross Margin Net Margin Operating Profit ▪ ATV ▪ Cost of traffic ▪ Cost of logistics ▪ Transaction fees ▪ Fixed Costs ▪ % Gross Margin
- 29. 29 For more go and check my online course. You will find there the model in Excel Click to check my course On-line Business Models in Excel – Practical Guide $90 $15
- 30. 30 As well as presentation on Slideshare On-line Business Models A practical guide presentation
- 32. 32 Restaurant is extremely difficult. You don’t only have to attract and manage customer but also manage quite a big production happening in the back-office
- 33. 33 Let’s have a look at the main challenges in Restaurant business Location Minimizing and Managing Fixed Costs Optimizing Capex Seasonality of Demand Upsell and cross-sell Standardization of services Queue ManagementPrice Discrimination Capacity management People rotation and knowledge management Growing customer base despite infrequent purchases Utilization of people
- 34. 34 When you want to set up a restaurant you have to not only face the monthly recurring costs but also invest a huge amount of money into the place
- 35. 35 Have a look what you will spend your money on long before opening of the restaurant Purchase of the place Furniture Design Kitchen equipemt Domestic Appliances Computer, cash till, POS Uniforms for employees
- 36. 36 There are plenty of monthly costs that have to be paid every month Food and drinksUtilities (water, electricity, gas, waste) Stock Rental of the place Services i.e. book-keeping Cleaning costs Personel
- 37. 37 Remember that apart from current costs you usually froze a lot of cash in the stock
- 38. 38 Let’s have a look at the simple model ▪ Number of meals per day ▪ Number of days Restaurant # of transactions Revenues Gross Margin Net Margin Operating Profit ▪ ATV - average ▪ Cost of marketing ▪ Franchising Fee ▪ Other Variable costs ▪ Fixed Costs ▪ % Gross Margin ▪ % Food ratio
- 39. 39 In the part about the using store checks for location analysis we were Passing by Engaged / stopping Leaving Taking away In store
- 40. 40 Before we go to Excel let’s talk about the logic we used to build the e-commerce Excel model ▪ Conversion rate to consumption at the restaurant ▪ Conversion rate into takeaways Visits # of transactions Revenues Gross Margin Net Margin Operating Profit ▪ ATV for both subgroups ▪ Cost of marketing ▪ Franchising Fee ▪ Other Variable costs ▪ Fixed Costs ▪ % Gross Margin ▪ % Food ratio
- 41. 41 Now it is time to transform it into a model in Excel ▪ Conversion rate to consumption at the restaurant ▪ Conversion rate into takeaways Visits # of transactions Revenues Gross MarginNet Margin Operating Profit ▪ ATV for both subgroups ▪ Cost of marketing ▪ Franchising Fee ▪ Other Variable costs ▪ Fixed Costs ▪ % Gross Margin ▪ % Food ratio
- 42. 42 For more go and check my online course. You will find there the model in Excel Click to check my course How to open a successful restaurant? $95 $10
- 43. 43 As well as presentation on Slideshare How to open a successful restaurant A practical guide presentation
- 44. 44 Company selling hand made clay goods
- 45. 45 We will use real life example of company producing hand- made products from clay Ceramic dishes Ceramic chimneys Ceramic tubes Ceramic pots
- 46. 46 To create a proper financial model you would have to model each and every element below. I will show you how to model Working Capital and Capex / Depreciation Sales M&E External services Taxes & Payments Payroll Taxes Other CAPEX Depreciation – 6 groups Working Capital Debt Equity changes Profit & Loss Balance Sheet Cash Flow
- 48. 48 When it comes to assets the problem is that they have 3 different components that you have to track. On top of that every asset has to be tracked separately DepreciationGross book value Net book value
- 49. 49 We get the net book value by deducting from gross book value the sum of all depreciation ever done Sum of all Depreciation Gross book value Net book value=_
- 51. 51 We first divide the fixed assets into 6 groups Fixed Assets Land Transportation Intangibles Buildings Equipment and Machinery Others
- 52. 52 Working capital consists of 4 major groups of components Inventory Working Capital Materials WIP Goods Finished Products Receivables Payments in advance for deliveries Trade receivables Other receivables Receivables resulting from taxes, subsidies Short term accruals Liabilities Trade liabilities Prepayments for deliveries Liabilities resulting from taxes, charges Liabilities resulting from salaries Accruals Cash and equivalents
- 53. 53 We will draw data from other profit and loss sheets and on the basis of the data we will calculate the working capital positions that in turn will be fed into Balance and sheet as assets or liabilities P&L Sales External Services Other Working Capital BS - Assets BS - Liabilities M&E ▪ Assets ▪ Liabilities
- 54. 54 When it comes to assets the problem is that they have 3 different components that you have to track. On top of that every asset has to be tracked separately Turnover rotation in days Basis i.e. sales / operating costs / materials Position of Working capital i.e. inventory / receivables =x 365÷
- 55. 55 For more go and check my online course. You will find there the model in Excel Financial Modeling for Business Analysts and Consultants $90 $15 Click to check my course
- 56. 56 As well as presentation on Slideshare Financial Modeling for Business Analysts and Management Consultants Step by step guide presentation
- 57. 57 You can also check the presentation with an overview of my most favorite functions in Excel Essential Excel for Business Analysts and Consultants A practical guide presentation
- 58. 58 Check what course will help you to be word class Management Consultant Top 10 courses that every Management Consultant should take My super objective view presentation
- 59. 59 There are also some books that I highly recommend Top 25 books that every Management Consultant should read My super objective view presentation
- 60. 60 Subscribe to our channels: www
- 61. 61 If you want to check how in practice to manage a consulting project a would recommend my presentation How to manage a consulting project? A practical guide presentation
- 62. 62 You can also find some useful tips on modeling in Excel offline business in one of my presentations Business modeling of offline businesses in Excel A practical guide presentation
- 63. 63 Check overview of most important things you should know about Retail Retail for Business Analysts and Management Consultants A practical guide presentation
- 64. 64 Check my extensive presentation on productivity hacks to see how you can me 10x more productive Management consultant productivity hacks How to be lazy and still get things done presentation
- 65. 65 You can also check the presentation with an overview of my most favorite shortcuts in Excel Excel shortcuts for Management Consultants A practical guide how to work fast in Excel presentation
- 66. 66 You can also check the presentation devoted to issues trees What is an issue tree and how to use it? Practical guide with examples presentation
- 67. 67 You can also check my guide how to create a marketplace How to create a successful marketplace Practical guide for startup founders presentation
- 68. 68 Check my presentation on market research methods to understand them properly Market research Practical guide for startups and entrepreneurs presentation
- 69. 69 Check my presentation other presentations Essential Lean Manufacturing for Management Consultants Practical guide how to cut costs presentation
- 70. 70 You can also have a look at how to create a financial model in Excel Financial Modeling for Business Analysts and Management Consultants Step by step guide presentation
- 71. 71 Check also my other presentations Management Consulting Presentations Practical guide how to prepare a great presentation presentation
- 72. 72 Check my presentation that will help you get into consulting How to get into consulting Practical guide how to pass the case part presentation
- 73. 73 I recommend also looking at some techniques to improve your business. Click on the cover below to go to the presentation How to become world class analyst A practical guide presentation
- 74. 74 Check also my other presentations Management Consulting Presentations Practical guide how to prepare a great presentation presentation
- 75. 75 Check also my other presentations Production for Management Consultants Practical guide presentation
- 76. 76 Check also business modeling in Excel Business models Practical guide for startups and entrepreneurs presentation
- 77. 77 Check my presentation on starting and running consulting company How to create management consulting presentations? A practical guide presentation
- 78. 78 Check my extensive presentation on productivity hacks to see how you can me 10x more productive Management consultant productivity hacks How to be lazy and still get things done presentation
- 79. 79 If you need more detailed version on productivity hacks you can check our course on productivity hacks Click to check my course Management Consulting Productivity Hacks $45 $15
- 80. 80 Check my presentation on restaurant business model to understand it properly How to open a successful restaurant A practical guide presentation
- 81. 81 Check my presentation on on-line models to understand them properly On-line Business Models A practical guide presentation
- 82. 82 For more check also my on-line course Click to check my course On-line Business Models in Excel – Practical Guide $45 $15
- 83. 83 Check my presentation on starting and running consulting company Start and run consulting company A practical guide presentation
- 84. 84 There is an interesting summary of ways to test cheaply businesses MVP – how to test your business idea without building the product A practical guide presentation