This document provides guidance on building a 5-year profit and loss (P&L) statement to present to investors. It explains that investors expect to see a simplified income statement broken out by year to understand the company's financial projections. The document outlines the basic structure of an income statement, including revenue, cost of goods sold, gross profit, expenses, and net profit. It emphasizes translating assumptions about the business into numbers to populate the P&L statement and presents an example for a new product company.

1. BUILDING A PROFIT & LOSS STATEMENT 1
© Rick Rasmussen 2019

2. START UP
FINANCIAL
MODELS
2
Your financial model is your ‘real’
business plan
Revenues Profits Cash
needs
Hiring
plans
Burn
Rate,
Runway
Investors don’t put their money into
ideas.
They put their money into
businesses…

3. INVESTORS EXPECT:
A 5-year Profit & Loss (P&L)
A simplified Income Statement
Broken out by Year in the presentation

4. INVESTORS EXPECT:
A 5-year Profit & Loss (P&L)
A simplified Income Statement
Broken out by Year in the presentation
And…
to have you show “financial literacy”

5. WHY FIVE YEARS?
A typical fund is 10 years
Must invest and ”exit”
during that window
Five year financials give
adequate picture of exit
potential within fund lifetime
Raising $ Investing Period Harvesting Period
Fund Launch
1 yr 3-5 years 5-7 years
Fund I LLC

6. THREE FINANCIAL STATEMENTS
Balance Sheet: A "snapshot”
Assets vs. Liabilities
At a specific time
Income Statement: A “video”
Measures Financial Health
Income vs. Expenses
Over a period of time
Cash Flow Statement: Shows effects on Cash
based on Balance Sheet and Income Statement accounts

7. THREE FINANCIAL STATEMENTS
Balance Sheet: A "snapshot”
Assets vs. Liabilities
At a specific time
Income Statement: A “video”
Measures Financial Health
Income vs. Expenses
Over a period of time
Cash Flow Statement: Shows effects on Cash
based on Balance Sheet and Income Statement accounts

8. INCOME STATEMENT: BASIC STRUCTURE

9. INCOME STATEMENT: BASIC STRUCTURE
Revenue
- Cost of Goods Sold (Variable costs)
= Gross Profit (Rev – COGS)
.

10. INCOME STATEMENT: BASIC STRUCTURE
Revenue
- Cost of Goods Sold (Variable costs)
= Gross Profit (Rev – COGS)
Gross Profit
- Expenses (Fixed Costs)
R&D
Sales and Mktg
General and Administrative (G&A)
= Net Profit [Gross Profit - Expenses]
.

11. INCOME STATEMENT: BASIC STRUCTURE
Revenue
- Cost of Goods Sold (Variable costs)
= Gross Profit (Rev – COGS)
Gross Profit
- Expenses (Fixed Costs)
R&D
Sales and Mktg
General and Administrative (G&A)
= Net Profit [Gross Profit - Expenses]
+/- Other Income (expense)
= Net Income

12. THREE THINGS TO FIGURE OUT…
Revenue
- Cost of Goods Sold (Variable costs)
= Gross Profit (Rev – COGS)
Gross Profit
- Expenses (Fixed Costs)
R&D
Sales and Mktg
General and Administrative (G&A)
= Net Profit [Gross Profit - Expenses]
+/- Other Income (expense)
= Net Income

13. 13
Cash flow positive

14. TRANSLATING INTO NUMBERS
14
in $M Yr 1 Yr 2 Yr 3 Yr 4 Yr 5
Revenue $0.1 2.5 $17.4 $31.5 $49.2
COGS 0.2 1.0 7.2 11.8 16.4
Gross
Profit
(.02) 1.4 10.1 19.7 32.8
Expenses 2.4 6.2 10.1 15.1 21.1
Net
Profit
($2.4) ($4.7) $0.05 $4.5 $11.6
?

15. TRANSLATING INTO NUMBERS
15
in $M Yr 1 Yr 2 Yr 3 Yr 4 Yr 5
Revenue $0.1 2.5 $17.4 $31.5 $49.2
COGS 0.2 1.0 7.2 11.8 16.4
Gross
Profit
(.02) 1.4 10.1 19.7 32.8
Expenses 2.4 6.2 10.1 15.1 21.1
Net
Profit
($2.4) ($4.7) $0.05 $4.5 $11.6
?
Note: This is not GAAP or IFRS accounting!
A P&L statement is a way to capture financial information that is easier to convey and understand

16. HOW CAN YOU DO THIS?
You’re predicting the future
With little or no real evidence
Trying to reassure investors
that your guesses are valid
16

17. TELL A STORY
Startup financials are your story
expressed in numbers
Build out your story and then
translate
17

18. STEPS TO BUILD AN PROFIT & LOSS STATEMENT
Build a
timeline with
assumptions
01
Build out Unit
Economics
02
Use curves to
build short-
term model
12, 18 or 24 months
03
Predict Year
5 model
(Zone of Reason)
Fill-in P&L
and/or
present graphs
04

19. REPRESENTATIVE COMPANY TIMELINE
Q3Q1 Q2 Q7Q6 Q8
Series B
Company
Starts
First
Production
Full
Production
Series A
Second
Production
Cost
Reduction
First
Orders
Seed Funding
Q4 Q5
Employees: 6 10 14 18 22 25 29 33
50K/month
Shipments

20. WHAT DOES YOUR CURVE LOOK LIKE?
How deep?
How wide?
Timing?
Slope?
20

21. REVENUE CURVES VARY AS A FUNCTION OF THE
BUSINESS
Sales Volume = Height
Time to Market = Length
Sales Growth = Slope

22. REVENUE CURVES VARY BY MARKET TYPE
Existing Market
Linear with S&M
expenditures
Re-Segmented Market
Positioning and education
New Market
Education and adoption
1
2
3
4
5
6
7
1 2
3
4
5
6
7
1 2 3
4
5
6
7

23. PRIMARY BUSINESS MODELS
Product
Tangible Solution
Design once, sell many
Service
Custom Solution
Intangible Value
Trade
Connect Buyers and Sellers
Product
Service Trade

24. REVENUE CURVES VARY BY BUSINESS MODEL TYPE
“Scalable”
Product
Service
Due to Overhead Costs
Trade
1
2
3
4
5
6
7
1 2 3
4
5
6
7
1
2
3
4
5
6
7

25. YOUR COSTS WILL VARY WITH TECHNOLOGY AND
ECONOMIES OF SCALE
Decreasing Costs Uncertain Costs Increasing Costs
Technology
Transportation
Manufacturing
LaborRaw Materials
Regulations

26. P&L EXAMPLE 1:
A NEW PRODUCT COMPANY
26
Introducing
NewProdCo
World’s best
Projection
Clickers

27. STEP 1: ASSUMPTIONS
Revenue Model: A product, one-time sale
Market Type: Re-segmented Market
Marketing Strategy: B2C
Sales Channel: Sales through online Channnels
Amazon, etc
Costs: First production: $10
First 2 years $2.50
Declining costs over time

28. STEP 1: ASSUMPTIONS
Production: Subcontract Manufacturing
no factory required
Time-to-Market:
Takes 3 months to develop first prototypes
Three months to sample customers
Three months to first production

29. STEP 2: UNIT ECONOMICS
Our unit is one clicker
Unit Price: $16.00
Unit Cost: $7.00
Unit Profit: $9.00
Unit Margin: 58.3%

30. SUMMARY: UNIT ECONOMICS
We’ve identified
“The Unit” A clicker
Form of revenue One-time sale
Price $16
Cost $7
Profit $9
Profit Margin 56.25%

31. NEWCO TIMELINE
Q3Q1 Q2 Q7Q6 Q8
Company
Starts
First
Prototype
50Ku
per
Quarter
First
Production
Unit
Profits
Customer
Samples
Q4 Q5
100Ku
per
Quarter

32. A PRODUCT BUSINESS
A typical product business
Key is adequate margin
to account for fixed costs
Concerns about
inventories, cash flow, etc.
Typical
Benchmarks
Revenues High
COGS Medium
Net Revenue Medium
Marketing Medium
R&D Medium
G&A Medium
Total Fixed Costs Medium
Net Profit Low/Medium

33. ESTIMATE UNITS / QUARTER
Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8
Units Sold (K) 0 1 10 40 75 110 140 200
ASP $0 $8 $16 $16 $16 $16 $16 $16
Total $K $0 $8 $160 $640 $1,200 $1,760 $2,240 $3,200
Unit Cost $10 $7 $7 $7 $7 $7 $7
COGS $K $0 $10 $70 $280 $525 $770 $980 $1,400
Gross Profit $0 ($2) $90 $360 $675 $990 $1,260 $1,800
Gross Margin % - (25%) 56.25% 56.25% 56.25% 56.25% 56.25% 56.25%
Evidence:
1. Your timeline
2. Type of business and
typical growth curves

34. TOTAL REVENUE
Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8
Units Sold (K) 0 1 10 40 75 110 140 200
ASP $0 $8 $16 $16 $16 $16 $16 $16
Revenue $K $0 $8 $160 $640 $1,200 $1,760 $2,240 $3,200
Unit Cost $10 $7 $7 $7 $7 $7 $7
COGS $K $0 $10 $70 $280 $525 $770 $980 $1,400
Gross Profit $0 ($2) $90 $360 $675 $990 $1,260 $1,800
Gross Margin % - (25%) 56.25% 56.25% 56.25% 56.25% 56.25% 56.25%
ASP is
Average Selling Price
You can also list individual
product lines and sum them up

35. CONSIDER COST OF GOODS SOLD (COGS)
Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8
Units Sold (K) 0 1 10 40 75 110 140 200
ASP $0 $8 $16 $16 $16 $16 $16 $16
Revenue $K $0 $8 $160 $640 $1,200 $1,760 $2,240 $3,200
Unit Cost $10 $7 $7 $7 $7 $7 $7
COGS $K $0 $10 $70 $280 $525 $770 $980 $1,400
Gross Profit $0 ($2) $90 $360 $675 $990 $1,260 $1,800
Gross Margin % - (25%) 56.25% 56.25% 56.25% 56.25% 56.25% 56.25%

36. GROSS PROFIT FOR FIRST 8 QUARTERS
Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8
Units Sold (K) 0 1 10 40 75 110 140 200
ASP $0 $8 $16 $16 $16 $16 $16 $16
Revenue $K $0 $8 $160 $640 $1,200 $1,760 $2,240 $3,200
Unit Cost $10 $7 $7 $7 $7 $7 $7
COGS $K $0 $10 $70 $280 $525 $770 $980 $1,400
Gross Profit $0 ($2) $90 $360 $675 $990 $1,260 $1,800
Gross Margin % - (25%) 56.25% 56.25% 56.25% 56.25% 56.25% 56.25%
Gross Profit is
Revenue minus COGS

37. CONSIDER MARGINS
Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8
Units Sold (K) 0 1 10 40 75 110 140 200
ASP $0 $8 $16 $16 $16 $16 $16 $16
Revenue $K $0 $8 $160 $640 $1,200 $1,760 $2,240 $3,200
Unit Cost $10 $7 $7 $7 $7 $7 $7
COGS $K $0 $10 $70 $280 $525 $770 $980 $1,400
Gross Profit $0 ($2) $90 $360 $675 $990 $1,260 $1,800
Gross Margin % - (25%) 56.25% 56.25% 56.25% 56.25% 56.25% 56.25%
You want to know if they align with industry standards
In this case, they’re flat as prices and costs don’t vary

38. TIME TO ADD FIXED COSTS
Salaries and Expenses by Department
Research & Development (R&D) Research, Engineering and Development
Sales & Marketing (S&M) Promoting and selling product
Operations Making and distributing product
General & Administrative (G&A) “Overhead” of corporate management,
finance, legal, rent, etc.

39. STARTUP SALARY GUIDELINES
Don’t assume free salaries forever
No one will work for free
US, Canada, Western Europe, Japan, Korea $100K / person / year
Rest of World $50K / person / year
This covers everything needed (e.g. benefits)
After profitability or after year 5, these often rise by 50% or more
39

40. NON-SALARY EXPENSES
R&D
Subcontractors and outsourced engineering
Non-depreciated tools, servers
Marketing and Sales
Trade shows
Marketing campaigns
[Operations] optional
Subcontractors
Facilities
G&A
Legal, IP, accounting expenses

41. ENGINEERING / R&D:
Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8
Headcount 1 2 2 2 3 3 3 4
Salaries $25 $50 $50 $50 $75 $75 $75 $100
Expenses
Tools 10 10 10 10 20 20 20 20
Contractors 50 50 50 50 100 100 100 100
Travels 10 20 20 20 20 20 40 40
Expenses R&D $95 $130 $130 $130 $215 $215 $235 $260

42. MARKETING & SALES:
42
Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8
Headcount 2 3 4 5 6 7 8 9
Salaries $50 $75 $100 $125 $150 $175 $200 $225
Expenses
Campaigns 50 50 100 250 250 400 400
Contractors 50 50 50 50 100 100 100 100
Travel 10 20 20 20 20 20 30 30
Expenses
Marketing $110 $195 $220 $295 $520 $545 $730 $755

43. GENERAL & ADMINISTRATIVE:
Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8
Headcount 0 1 2 2 3 4 5 6
Salaries $0 $25 $50 $50 $75 $100 $125 $150
Expenses
Legal 50 10 10 20 50 100 100 100
IP Filings 50 50 50 50 50 50
Travel 10 20 20 20 50 50 50 50
Expenses G&A $60 $55 $130 $140 $225 $300 $325 $350

44. ADD IN FIXED COSTS THEN TOTAL AS EXPENSES
Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8
Units Sold (K) 0 1 10 40 75 110 140 200
ASP $0 $8 $16 $16 $16 $16 $16 $16
Revenue $K $0 $8 $160 $640 $1,200 $1,760 $2,240 $3,200
Unit Cost $10 $7 $7 $7 $7 $7 $7
COGS $K $0 $10 $70 $280 $525 $770 $980 $1,400
Gross Profit $0 -$2 $90 $360 $675 $990 $1,260 $1,800
R&D $95 $130 $130 $130 $215 $215 $235 $260
S&M $110 $195 $220 $295 $520 $545 $730 $755
G&A $60 $55 $130 $140 $225 $300 $325 $350
Expenses $265 $380 $480 $565 $960 $1,060 $1,290 $1,365
Net Profit ($265) ($382) ($390) ($205) ($285) ($70) ($30) $435

45. P&L FOR FIRST 8 QUARTERS
Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8
Units Sold (K) 0 1 10 40 75 110 140 200
ASP $0 $8 $16 $16 $16 $16 $16 $16
Revenue $K $0 $8 $160 $640 $1,200 $1,760 $2,240 $3,200
Unit Cost $10 $7 $7 $7 $7 $7 $7
COGS $K $0 $10 $70 $280 $525 $770 $980 $1,400
Gross Profit $0 -$2 $90 $360 $675 $990 $1,260 $1,800
R&D $95 $130 $130 $130 $215 $215 $235 $260
S&M $110 $195 $220 $295 $520 $545 $730 $755
G&A $60 $55 $130 $140 $225 $300 $325 $350
Expenses $265 $380 $480 $565 $960 $1,060 $1,290 $1,365
Net Profit ($265) ($382) ($390) ($205) ($285) ($70) ($30) $435

46. P&L FOR FIRST 8 QUARTERS
Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8
Units Sold (K) 0 1 10 40 75 110 140 200
ASP $0 $8 $16 $16 $16 $16 $16 $16
Revenue $K $0 $8 $160 $640 $1,200 $1,760 $2,240 $3,200
Unit Cost $10 $7 $7 $7 $7 $7 $7
COGS $K $0 $10 $70 $280 $525 $770 $980 $1,400
Gross Profit $0 -$2 $90 $360 $675 $990 $1,260 $1,800
R&D $95 $130 $130 $130 $215 $215 $235 $260
S&M $110 $195 $220 $295 $520 $545 $730 $755
G&A $60 $55 $130 $140 $225 $300 $325 $350
Expenses $265 $380 $480 $565 $960 $1,060 $1,290 $1,365
Net Profit ($265) ($382) ($390) ($205) ($285) ($70) ($30) $435
Breakeven…!

47. MINIMUM FUNDING REQUIRED
Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8
Units Sold (K) 0 1 10 40 75 110 140 200
ASP $0 $8 $16 $16 $16 $16 $16 $16
Revenue $K $0 $8 $160 $640 $1,200 $1,760 $2,240 $3,200
Unit Cost $10 $7 $7 $7 $7 $7 $7
COGS $K $0 $10 $70 $280 $525 $770 $980 $1,400
Gross Profit $0 -$2 $90 $360 $675 $990 $1,260 $1,800
R&D $95 $130 $130 $130 $215 $215 $235 $260
S&M $110 $195 $220 $295 $520 $545 $730 $755
G&A $60 $55 $130 $140 $225 $300 $325 $350
Expenses $265 $380 $480 $565 $960 $1,060 $1,290 $1,365
Net Profit ($265) ($382) ($390) ($205) ($285) ($70) ($30) $435
Cumulative Loss 265 647 1037 1242 1527 1597 1627
$1,627
Probably ask for $2M+

48. LET’S START YOUR 5 YEAR P&L
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 %
Units Sold (K) 51 525
ASP $16 $16
Revenue $K $808 $8,400
Unit Cost $7 $7
COGS $K $360 $3,675
Gross Profit $448 $4,725
R&D 485 925
S&M 820 2550
G&A 385 1200
Expenses $1,690 $4,675
Net Profit ($1,242) $50
Methods:
1. Bottom up and/or
curves
2. Estimate year 5 and
work backwards

49. WORK BACKWARD FROM YEAR 5
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 %
Units Sold (K) 51 525 3500
ASP $16 $16 $16
Revenue $K $808 $8,400 $56,000
Unit Cost $7 $7 $7
COGS $K $360 $3,675 $16,400
Gross Profit $448 $4,725 $39,600
R&D 485 925 5000
S&M 820 2550 16000
G&A 385 1200 4800
Expenses $1,690 $4,675 $25,800
Net Profit ($1,242) $50 $13,800
Set a reasonable revenue
goal for year 5
< $20M/yr Too small
$20M - $50M Interesting
$50M - $100M Very
interesting
Over $100M Tough to
do. Will
need to
justify

50. THINK ABOUT YEAR 5
Zone of
Reason
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 %
Units Sold (K) 51 525 3500
ASP $16 $16 $16
Revenue $K $808 $8,400 $56,000 100%
Unit Cost $7 $7 $7
COGS $K $360 $3,675 $16,400 29%
Gross Profit $448 $4,725 $39,600 71%
R&D 485 925 5000 9%
S&M 820 2550 16000 29%
G&A 385 1200 4800 9%
Expenses $1,690 $4,675 $25,800 46%
Net Profit ($1,242) $50 $13,800 25%
Set a reasonable revenue
goal for year 5
< $20M/yr Too small
$20M - $50M Interesting
$50M - $100M Very
interesting
Over $100M Tough to
do. Will
need to
justify

51. ZONE OF REASON
The amount of
expense as a % of
revenue expected by
category
Not absolute, check
public companies in
same industry
51
% of Revenue B2C B2B
S&M 30 - 55% 15 - 30%
R&D 10 - 20% 15 - 30%
G&A 8 - 12% 8 - 12%

52. FILL IN THE GAPS
Add in
Years 3 and 4
Trend as
appropriate
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 %
Units Sold (K) 51 525 1000 1800 3500
ASP $16 $16 $16 $16 $16
Revenue $K $808 $8,400 $16,000 $28,800 $56,000 100%
Unit Cost $7 $7 $7 $7 $7
COGS $K $360 $3,675 $7,000 $12,600 $16,400 29%
Gross Profit $448 $4,725 $9,000 $16,200 $39,600 71%
R&D 485 925 1740 2630 5000 9%
S&M 820 2550 4420 8500 16000 29%
G&A 385 1200 2500 3850 4800 9%
Expenses $1,690 $4,675 $8,660 $14,980 $25,800 46%
Net Profit ($1,242) $50 $340 $1,220 $13,800 25%

53. IT’S A P&L…! $50+M Business
Losses for first year
Break even year 2
Steady State profitable
Expenses within
“Zone of Reason”
Need to raise
at least $1.2M
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 %
Units Sold (K) 51 525 1000 1800 3500
ASP $16 $16 $16 $16 $16
Revenue $K $808 $8,400 $16,000 $28,800 $56,000 100%
Unit Cost $7 $7 $7 $7 $7
COGS $K $360 $3,675 $7,000 $12,600 $16,400 29%
Gross Profit $448 $4,725 $9,000 $16,200 $39,600 71%
R&D 485 925 1740 2630 5000 9%
S&M 820 2550 4420 8500 16000 29%
G&A 385 1200 2500 3850 4800 9%
Expenses $1,690 $4,675 $8,660 $14,980 $25,800 46%
Net Profit ($1,242) $50 $340 $1,220 $13,800 25%

54. SIMPLIFIED FOR PRESENTATION
in $M Yr 1 Yr 2 Yr 3 Yr 4 Yr 5
Revenue $0.8 $8.4 $16.0 $28.8 $56.0
COGS 0.4 3.7 7.0 12.6 16.4
Gross
Profit
(0.4) 4.7 9.0 16.2 39.6
Expenses 1,7 4.7 8.7 15.0 25.9
Net
Profit
($1.2) $0.05 $0.3 $1.2 $13.8
Only relevant info
for a quick read.
Round to $K or $M
Delete all trailing
zeros
Simplify, simplify..!

55. REPRESENTATIVE “COMMON SENSE” CHECKLIST
Does this look like others in the industry?
Are there any strange jumps or gaps in any of the numbers?
Does this follow “Valley of Death” standards?
Can I tell how quickly company gets to break even?
Can I tell how much money needs to be raised?
Does the business large enough to care about?
Does this generate sufficient returns in a reasonable time?

56. FINANCIAL
KEY
PERFORMANCE
INDICATORS
56

57. FUNDING STRATEGY
TEMPLATE
57

58. GRAPHS
Income statements are generally
recognizable by most finance
professionals
Graphic representations differ.
Simplest: Break out Revenues
and Net Profits
Keep as periodic information, not
cumulative.
Year 1 Year 2 Year 3 Year 4 Year 5
Revenue 0 135 2460 17400 31500 49200
Profits 0 -2425 -4730 55 4538 11670
-10000
0
10000
20000
30000
40000
50000
60000

59. GROWBY SAYS:
Let’s do it
again…!
That was so
much fun!

60. BONUS: HOW TO BUILD
A ONE-PERIOD SAAS-BASED P&L
© Rick Rasmussen 2019

61. SECONDARY BUSINESS MODELS
Combining primary business modes in groups
Product Service Trade
Subscription x x
Marketplace x x
Brokerage x x
Ecosystem x x x
Product
Service Trade

62. REVENUE MODELS DRIVE UNIT ECONOMICS
Type Business Revenue Model Cost Model
Primary
Product Sales One time sale COGS
Service Sales Hourly Rate Hourly Cost
Trade Resell COGS
Derivative
Subscription Monthly Revenue CAC
Marketplace Transaction Fees open
Brokerage Commission Fees open
Ecosystem Combination open

63. PROJECT YOUR REVENUE
STEP 1: CALCULATE AVERAGE SALES PRICE ACROSS PLANS
$6 / month $12 / month $16 / month
Plan A Plan B Plan C
50% of Business
$6 x 0.5 = $3
25% of Business
$12 x 0.25 = $3
25% of Business
$16 x 0.25 = $4
$3 + $3 + $4 = $10 Average Sales Price (ASP) per month
$10 x 3 months = $30 Average Sales Price per quarter

64. PROJECT YOUR REVENUE
STEP 2: ESTIMATE SUBSCRIPTION GROWTH
+ ATTRITION ACROSS THE PERIOD
(i.e. Q1: January – March)
Beginning
Customer
Subscriptions Growth Attrition
Ending Customer
Subscriptions
Q1 0 3,020 (20) 3,000
Average Subscriptions
Beginning + Ending
2
=
0 + 3000
2
= 1500

65. PROJECT YOUR REVENUE
STEP 3: CALCULATE ESTIMATED REVENUE
Average
Subscriptions x
Average
Sales Price =
Estimated Revenue
Q1 1500 x $30 = $45,000

66. CATEGORIZE & PROJECT YOUR EXPENSES
STEP 1: CATEGORIZE COGS (I.E. COST OF GOODS SOLD)
COGS are direct costs
attributable to the
production and delivery of
goods or services sold
Examples:
-Hosting, cloud, database fees
-Support personnel / customer care costs
-Third-party web fees
-Ex: content delivery networks, etc
-Customer onboarding costs
-Payment fees
-Ex: bank fees, credit card gateways, etc.

67. CATEGORIZE & PROJECT YOUR EXPENSES
STEP 2: CATEGORIZE/CALCULATE COGS
Hosting, cloud, database fees $10000
Support personnel / customer care costs $8000
Third-party web fees $4000
Customer onboarding costs $4000
Payment fees $3000
Total $29000

68. CATEGORIZE AND PROJECT YOUR EXPENSES
STEP 3: CATEGORIZE OPERATING EXPENSES
Examples:
Salaries
Rent
Advertising
Legal & Professional
Equipment
Travel
Software
Operating expenses
(a.k.a. Fixed Costs)
are expenses incurred
through
normal business
operations

69. CATEGORIZE AND PROJECT YOUR EXPENSES
STEP 4: CALCULATE / PROJECT OPERATING EXPENSES
Salaries $7000
Rent $2000
Advertising $300
Legal & Professional $200
Equipment $200
Travel $200
Software $100
Total $10000

70. BUILDING THE PROFIT & LOSS STATEMENT
Q1
Total Sales $45000
Less: COGS - $29000
Gross Profit $16000
Less: Total Operating Expenses - $10000
Net Profit $6000

71. Deeper cash trough
SaaS Economics:
• Raise more $
• Spend on Customer
Acquisition
• Grow Faster
• Dominate Sector
Faster Growth

72. CONGRATULATIONS
YOU DID IT..!
You’re now a
financial genius
Get ready to present
to investors..!