Forecast Revenues and Costs

Stephen Lawrence and Frank Moyes

Graduate School of Business
University of Colorado
Boulder, CO 80309-0419
Financial Plan

Income Statement
Balance Sheet
Cash Flow
Summary
Assumptions
 Operating Expenses
Year 1 Year 2 Year 3
Marketing 30 45 65
R&D
Administration
Total 60 90 140
Cost of Goods
Year 1 Year 2 Year 3
Direct 70 130 160
Indirect 30 70 90
Total 100 200 250
Income Statement
Year 1 Year 2 Year 3
Revenue 250 350 500
COGs 100 200 250
Oper Expenses 60 90 140
 Fixed Assets (Plant)
Year 1 Year 2 Year 3
Assets 200 300 400
Depreciation 140 210 260
Fixed Assets 60 90 140
Working Capital
Year 1 Year 2 Year 3
Receivables 100 200 300
Inventory 50 75 125

Balance Sheet
Year 1 Year 2 Year 3
Receivables 100 200 300
Inventory 50 75 125
Fixed Assets 60 90 140
Revenue Drivers
Number of customers, transactions or units
Price per customer, transaction or unit
Average revenue per customer or transaction
Distribution channel discount
Market penetration
Response rate
Churn rate
Growth rate
New services or product
Cost of Revenue Drivers
Personnel costs (labor and/or salary)
Materials costs
Yields
Website operating costs
Systems costs
Warehouse and shipping expenses
Returns
Outsourcing expenses
Lease and/or rental expenses
Cost reductions
Depreciation large capital expenditures
Operating Expense Drivers

Sales & Marketing

Customer acquisition cost
Personnel expenses
Sales commissions
Exhibitions
Brand building
Tech support
Customer service
Operating Expense Drivers
Research and Development
Personnel expenses
Beta testing
Time to market
Patent and copyright application
Prototyping
Subcontracting
General and Administration
Personnel expenses
Recruiting expenses
MIS expenses
Office rent and utilities
Financial Dynamics

Who does the financial projections?

Investor questions
Drivers
Optimism vs. Pessimism
Financials Spreadsheet Template