$45.00 USD
You can simply enter the amount of new AE's hired per month (up to 3 types of AE's) and fill out the primary assumptions in regards to each AE type. This might be ideal for a marketing firm or a business that relies heavily on people maintaining relationships with clients in order to keep their revenue coming in for the services your business provides.
The reason why I have focused on this type of model is because many people have come to me because of the difficulty presented in trying to determine revenues that ramp over time and need to be mapped so that no matter when they actually begin in the 5 year timeline, the counter begins at 1 for their first month and so on. In this way, scaling productivity can be mapped no matter when the account executive is hired and based on varying % of quota effectiveness in their first year.
Account Executive Centered Financial Model 5-Year Projection Throughout the model, cells in light yellow with blue text can be changed.
Many businesses, startups or not, want to scale their sales by projecting account executive performance / head count growth and tying revenue directly to that.
This model allows you to do that with varying assumptions about how long it takes an AE to become fully productive and how many you plan on hiring monthly.
The logic to make this work is often difficult to make because you will have AE's that start at different times and you need to provision for the fact that they won't be 100% productive until sometimes between 9 and 12 months into the job.
To model this, we first create a matrix and from that matrix can aggregate all the data by month and roll it up into a quarterly/annual report as well as high level summaries.
The 'Business Overview' tab will have your start date, reserve, and financing assumption inputs.
The rest of the assumptions will be on the AE, Operating Costs, and Startup Costs tabs.
The AE tab will drive your account executive counts and the revenues thereof. The AE salaries are also defined here and flow to the P&L tabs.
The Operating Costs tab will drive all your fixed expenses such as CEO salaries, rent, basically all running fixed costs beyond AE salaries.
The startup costs tab just is a spot to enter costs that you plan on having happen prior to the start of business, such as construction, server buying, etc…
Note, if you can assume various fixed costs and not have revenue start until some month into the year. Simply don't enter any AE counts until the month you plan on revenue starting.
There is also function to determine what month each fixed costs starts and the monthly amount each year as this could change annually.
The variable costs are pretty straightforward. The COGS is an assumed % of revenue and can change annually.
The cash requirement numbers on the 'business overview' tab are probably the most complex, but basically they are trying to add up the startup costs + any negative cash flows that happen in the monthly cash flow. If you have a negative monthly cash flow occurrence, it is assumed that will result in capital required on top of the startup costs.
If you have no startup costs, but plan on having some operating costs start and then revenue start a few months later, your capital requirements would then be the cash needed to cover the losses that happen in those negative months however long they may be.
The leveraged scenario is adjusting the cash flow requirement basically be the same as the non-leveraged requirement except you reduce it by the financing amount and increase it by the amount of debt service for negative cash flow periods.
Account Executive assumptions include:
- Annual Quota
- Bonus
- % effectiveness by amount of months since hired
- Count hired by type per month
- Salary by type
- Bonus by type
The reason why I have focused on this type of model is because many people have come to me because of the difficulty presented in trying to determine revenues that ramp over time and need to be mapped so that no matter when they actually begin in the 5 year timeline, the counter begins at 1 for their first month and so on. In this way, scaling productivity can be mapped no matter when the account executive is hired and based on varying % of quota effectiveness in their first year.
Note you can choose to make an AE not reach 100% quota production effectiveness until any month, not just by month 10.
The rest of this model is highly versatile in determining all your other costs, financing scenarios, and summaries of all the financial projections that stem from your assumptions.
One of the more helpful charts was comparing the average revenue per AE against the average AE salary over time.
The cash requirements area within the business overview section is extremely versatile and accurate. It looks at the future financial projections and figures out the amount of capital needed to stay afloat in a leveraged or non-leveraged scenario (financing or no financing).
The capital requirement for each case is determined by the total startup costs, any negative monthly cash flows, and debt service (in the leveraged case).
The rest of this model is highly versatile in determining all your other costs, financing scenarios, and summaries of all the financial projections that stem from your assumptions.
One of the more helpful charts was comparing the average revenue per AE against the average AE salary over time.
The cash requirements area within the business overview section is extremely versatile and accurate. It looks at the future financial projections and figures out the amount of capital needed to stay afloat in a leveraged or non-leveraged scenario (financing or no financing).
The capital requirement for each case is determined by the total startup costs, any negative monthly cash flows, and debt service (in the leveraged case).
You can model out a scenario where you finance all of the cash needs and therefore have no personal equity contribution needed to survive the planned burn.
Tab Features:
Instructions
Business Overview
This is a discounted cash flow valuation that runs off of terminal year multiple + future pre-tax/ pre debt service cash flows and discounts them back to the present to come up with a total value.
Charts
Tab Features:
Instructions
- Explains the inter-workings of all the tabs and how to approach the model in general.
Business Overview
- Has a few high-level inputs and then shows you a 5-year summary of key metrics.
- Shows the amount of revenue required to break even each year based on fixed/variable costs.
This is a discounted cash flow valuation that runs off of terminal year multiple + future pre-tax/ pre debt service cash flows and discounts them back to the present to come up with a total value.
Charts
- More charts to help visualse the business case.
- 1st assumption tab where you build your account executive hiring plan, base salaries, revenue quota's, % effectiveness, and bonuses.
- 2nd major place where you build out your on-going costs related to the business.
- 3rd assumption tab where you enter any costs that happen prior to business operations.
- The monthly/quarterly/annual P&L tabs show the forecasted expectations based on what you have built in the main assumption tabs.
- Enter the specs of the loan if applicable. The actual loan amount is input on business overview.
Account Executive Centered Financial Model 5-Year Projection Throughout the model, cells in light yellow with blue text can be changed.
Many businesses, startups or not, want to scale their sales by projecting account executive performance / head count growth and tying revenue directly to that.
This model allows you to do that with varying assumptions about how long it takes an AE to become fully productive and how many you plan on hiring monthly.
The logic to make this work is often difficult to make because you will have AE's that start at different times and you need to provision for the fact that they won't be 100% productive until sometimes between 9 and 12 months into the job.
To model this, we first create a matrix and from that matrix can aggregate all the data by month and roll it up into a quarterly/annual report as well as high level summaries.
The 'Business Overview' tab will have your start date, reserve, and financing assumption inputs.
The rest of the assumptions will be on the AE, Operating Costs, and Startup Costs tabs.
The AE tab will drive your account executive counts and the revenues thereof. The AE salaries are also defined here and flow to the P&L tabs.
The Operating Costs tab will drive all your fixed expenses such as CEO salaries, rent, basically all running fixed costs beyond AE salaries.
The startup costs tab just is a spot to enter costs that you plan on having happen prior to the start of business, such as construction, server buying, etc…
Note, if you can assume various fixed costs and not have revenue start until some month into the year. Simply don't enter any AE counts until the month you plan on revenue starting.
There is also function to determine what month each fixed costs starts and the monthly amount each year as this could change annually.
The variable costs are pretty straightforward. The COGS is an assumed % of revenue and can change annually.
The cash requirement numbers on the 'business overview' tab are probably the most complex, but basically they are trying to add up the startup costs + any negative cash flows that happen in the monthly cash flow. If you have a negative monthly cash flow occurrence, it is assumed that will result in capital required on top of the startup costs.
If you have no startup costs, but plan on having some operating costs start and then revenue start a few months later, your capital requirements would then be the cash needed to cover the losses that happen in those negative months however long they may be.
The leveraged scenario is adjusting the cash flow requirement basically be the same as the non-leveraged requirement except you reduce it by the financing amount and increase it by the amount of debt service for negative cash flow periods.
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