Investment
Where's the money?
We help you develop a financial model (including P&L, Cash-flow and Balance Sheet) that reflects the opportunity of the innovation. With a focus on key assumptions and with the ability to develop scenarios, the model underpins the business plan.
Outline
A strong financial case is a key success criteria for most innovation. Given that the business model assumptions and the design of the solution depend heavily on one another, it is important to align the financial and solution thinking early in the process.
It is not unusual however that the business modeling proceeds independently to the design of the solution. This can lead to issues that can grow to be significant.
We work with innovation team to help build financial model, so that the solution is fully aligned to the financial model.
Outcomes
Our Approach
Process
The Investment phase is based on a series of workshops and requires 8-12 days of effort. Typically, this includes:
- The Gross Profit workshop covers volume, pricing and revenue discussions
- The Overhead workshop includes discussions on headcount profile, general overheads and scaling
- The Investment and Cash workshop covers anticipated investments, cash flows and funding
- The Sensitivity Workshop workshop explores the impact of changes to the key assumptions
If there is a specific need (such as a key presentation), this can be done in 2 weeks, however we recommend that there is a pause between workshops, to allow the ideas to consolidate and to enable a fresh perspective at each session.
Methodology
Workshops
The Investment activity is carried out through a number of workshops, which capture the key assumptions that underpin the solution
Iterative Review
On a regular basis, we review the shape of the financials with the key stakeholders.
Outcomes
Profit and Loss (P&L) / Income statement
We work with you to produce a 3-5 year P&L built from anticipated sales across multiple product / service lines. Highly configurable, the model can be maintained / updated by the innovation team as required.
Cash flow forecast and Balance Sheet
Integrated with the P&L, the cash-flow forecast and Balance sheets all reflect a series of key assumptions.
Key assumptions
Crucial to early stage innovation discussions with stakeholders and investors, and equally vital for the product / innovation team, we generate a list of key project assumptions.
Financials Dashboard
The financials dashboard illustrates the financial case for the innovation project, which can be tailored to innovation / client requirements.
Benefits
Create clear objectives tied to financial metrics
The assumptions that drive the financial model form a clear set of objectives to be delegated out to the innovation team. The link between assumptions and financial progress is clear, enabling buy-in.
Prioritise functionality that supports value creation
With clarity on the financial assumptions (and the underpinning business model) it enables functionality to built in from day 1 that has a financial impact.
This allows the team to move beyond typical metrics (#subs, #active users, Average sales price) to more detailed measures (e.g. experience flow, page duration). .
Manage & Communicate the financials confidently
With the knowledge that the financials are fully integrated, based on a set of assumptions, you will be able to provide a coherent explanation of the business financials as required.
Equally, this will provide you with the tools to manage the financials effectively.
Interested in how we can help?
Get in contact