In a 3-statement financial model, accounts receivable can be calculated as a part of the balance sheet. Accounts receivable represents the amount of money that a company expects to receive from its customers for goods or services that it has sold on credit.
The Business of Being a Franchisor is All About Branding
Sure you need a good system, good IP, good products, and a great process in general to succeed at being a franchisor. One of the most important things in this space is maintaining a strong brand. It gives a lot of network effects and helps one build momentum. This is especially true for new franchise businesses.
Financial Modeling Approach for a Public Golf Course
I've built financial models for private and public golf courses (for clients and general templates for anyone to use). The main difference between these two is the revenue drivers. Public courses are more of a capacity-based model for walk-ins that pay a one-time course fee. Private courses are a different kind of capacity model.
Modeling Monthly Distributions vs Annual Distributions in a Joint Venture Cash Flow Waterfall
I've done a lot of joint venture real estate models for clients and also built standalone templates. Some I've done based on monthly distributions and others on an annual period-only schedule. Let's talk about how the calculations vary.
Subscription Pricing Strategies for a Marketplace
You might be starting a new marketplace business or attempting to introduce a subscription offering to your existing marketplace users where they pay some monthly fee or bi-annual / annual fee for better experience / perks / what have you. So, the question is, how do you price your subscription service?
More Hurdles, or Less Hurdles: What is Best in an IRR Hurdle Waterfall Structure?
In finance, a cash flow waterfall refers to the distribution of cash flows from an investment or project among various parties, such as investors, sponsors, and lenders. The internal rate of return (IRR) cash flow waterfall is a specific type of cash flow distribution that allocates cash flows based on the IRR achieved by each party.
What Makes a Good Financial Dashboard Template?
The driving force behind a dashboard template is usefulness. It should give a quick snapshot at the most important financial data / key metric data of the business in question. That may be different depending on the type of business the dashboard is for.
Biggest Reason Assisted Living Facilities Fail
Sometimes it can be healthy to look at why things fail rather than why they succeed. We are going to analyze an assisted living facility in a way that looks at common failures. In any business, sometimes the reason for failure is just that nobody wants your products or services anymore (Blockbuster) and that is not in your control, except that you can pivot, but a building that is designed to take care of old people is not likely to fall out of demand, so let's look at what could possibly go wrong.
Depreciation and all the Wild Accounting That Comes With It
Most of the startup financial models that I built here on the site have depreciation factored in. I generally build logic for straight-line methodology only, but when you get deep down into the nuance and Accounting for depreciation, things get wild.
Best Location to Start a Laundromat
A laundromat is one of the more popular businesses to startup as it is fairly simple to understand. You need to either build up a new location or buy one, get the equipment setup, and then let the business run while keeping up with the maintenance of the machines and the property. One of the most important things in this industry is location. Good traffic means high utilizations and a better ROI.
Key Metrics for Hotel Financial Modeling
I've done a few hotel financial models for clients as well as built a custom development/acquisition spreadsheet from scratch. Below we are going to talk about key metrics of the hotel industry and the logic / calculations.
What is Working Capital?
Anyone running a business needs a good sense of what working capital is and how to manage it properly. This is especially true for startups that are getting some revenue, but have a lot of moving parts for how cash comes in and cash goes out. If the settings are not right, you may run out of working capital and then require a credit facility / loans or other high costs of capital (much higher than simply using the revenue you earn to pay for your expenses).
Examples of Alternative Lending
Traditional lending is going to a bank and getting a mortgage where you simply pay principal and interest each period based on an interest rate, total term, and payments per year or getting an auto loan with regular p+i repayments over 5 to 7 years. However, there are some alternative lending options that have come up over the years so let's get into it.
Consultants Can Use Excel to Track Billable Time
Ok, so I have actually used the same time tracker that I built back in 2017 for myself for the past 6 years. It is simple and I can do all the time tracking I need for all my clients. It works awesome and if you are a single person user, this solution is great and everyone has Excel so it is widely available to most people without any ongoing fees. I also like this solution better than web-based solutions that I've tried.
Preferred Return Effect on Total Return on Investment
This is a pretty in-depth idea that has a lot of moving parts / components. I will try to keep it high level and as understandable as possible. Basically, the idea is to take a look at how the existence of a preferred return can impact investors and operators (LPs / GPs) as opposed to not having a preferred return that is due and simply splitting the cash flows at a defined rate.
Legal Structure of a Preferred Return Joint Venture vs a Model
First and foremost, I am not an attorney of any kind and you should consult one before drafting up an agreement. What I am talking about below is just some rules of thumb to consider when you go to explain what you want to someone that is used to drafting joint venture agreements where there is a preferred return in place.
Preferred Equity Waterfall Modeling Considerations
Being able to model an idea requires a really good understanding of what it is being modeled. With preferred equity, we must understand a few different things in order to even attempt to build something that is generally useful to LPs and/or GPs as they try to figure out a feasible deal structure for their joint venture.
Car Wash Economics and Modeling Tips
Car wash modeling can be approached using a variety of methods, but here are some steps that could be taken to create a basic model:
Financial Modeling Techniques for Equipment Rental Business
I've done two main equipment rental model templates and a few custom builds for clients. I will go through all the various styles I have seen for creating financial forecasts / cash flow forecasts for this type of business below as well as some techniques I have not tried before.
Things to Consider When Financial Forecasting for an Assisted Living Facility
Financial forecasting for an assisted living facility requires a comprehensive analysis of various aspects of the business. Some of the essential aspects to consider are:
Subscription Modeling Challenges: Rolling Revenue Forecast
When you have a subscription-based business, one of the more difficult tasks to do is create an ongoing revenue forecast that consistently takes into account all existing subscribers, future subscribers, and the resulting retention of those cohorts. It is important to do for general financial planning, expansion, capex spending, and operational decision-making as well as strategizing.
When is the Right Time for an Interest Rate Swap?
Bottom line, nobody knows the future so this is speculation to some degree. There are a few different scenarios that one may want to jump into a swap, but it really is dependent on your expectations of future interest rates or the need to hedge. Apple has done these with all their cash reserves.
Seller Financing and the Real Estate Industry
Seller financing, also known as owner financing, is a method of buying or selling a property in which the seller provides financing to the buyer. While seller financing can be used in any industry that involves the sale of a property, it is most commonly used in the real estate industry.
Ethics and the Real Estate Brokerage Business
Real estate brokerage businesses must uphold ethical considerations in their day-to-day operations to maintain their reputation and trust among clients. Here are a few ethical considerations for real estate brokerage businesses:
How to Calculate Profit per Job in a Construction Company
Calculating profit per job in a construction company involves several steps. Here's a general guide on how to do it:
Cash Flow Waterfalls and Joint Ventures: High Level Overview
When starting a joint venture, it is important to consider the use of a cash flow waterfall. A cash
flow waterfall is a framework that outlines the order in which cash flows are distributed among the
different stakeholders in a project, i.e., a cash flow waterfall is a method of prioritizing how cash flows
are distributed or allocated in a structured manner. In a joint venture, the cash flow waterfall can help
to ensure that all parties are treated fairly and that there is a clear understanding of how profits will be
distributed.
General Types of REITs and Their Risk Profile
Real Estate Investment Trusts (REITs) are a popular way for investors to gain exposure to the real estate market without owning physical property. Here are some common types of REITs and their risk profiles:
Template with IRR Hurdles and a GP Catch-up Option
I've been asked enough about adding this feature that it was time to do a template that specifically offered the option to implement a preferred return (IRR) catch-up hurdle for the GP / sponsor of a joint venture. This template will do all the calculation work for you. The catch-up provision kicks in after the LP has achieved their first IRR hurdle, so the order is: LP 1st hurdle, then the catch-up, then the remaining hurdles kick in per available cash flow. If there is no catch-up, then simply enter 0% for that input cell.
Tips for Starting a Successful Used Car Dealership
Starting any business required good planning. You don't want to run out of cash before you ever get started and it is important to take calculated risks and weigh options for inventory targeting as well as sales team planning, management, pricing, and more.
Marketplace with Subscription Option - 5 Year Financial Model
This template combines the best logic of a subscription business and a marketplace business. You are getting high flexibility with this financial model. The main purpose is to create a comprehensive forecast for a business that runs a marketplace and has an option for up to 3 subscription tiers. You can use this independently as well if you just have a subscription business or just have a marketplace business by zeroing out the assumptions for whichever component you don't want to use.
What is Multi-family Real Estate?
Multi-family real estate refers to residential properties that are designed and built to house multiple households, typically in the form of apartments, condominiums, townhouses, or other types of multi-unit buildings. These properties are often owned and managed by a single entity, such as a real estate investment trust (REIT), a private equity firm, or a property management company.
Role of Debt in Multi-family Real Estate Investing
Debt plays a crucial role in multi-family real estate investing, as it can significantly impact the returns on an investment. Debt is typically used to finance a portion of the acquisition or development costs of a property, and it can come in various forms, such as traditional mortgages, mezzanine financing, and bridge loans. Here are some ways in which debt impacts multi-family real estate investing:
Best Practices in Job Costing
Job costing is important. Any general contractor should have a good system to estimate what jobs will cost, what their expected margins will be, and track actual results to compare how they are doing against these targets. If you don't want to run out of money, it is important to do this well.
Does Your Car Wash Business Have These Features?
The car wash industry is constantly evolving, and there are several new trends that are shaping the industry. Some of the most notable trends in the car wash industry include:
What is "Industry 4.0" in Manufacturing?
Plain and simple, the term "Industry 4.0" simply means the fourth industrial revolution. It refers to the integration of advanced technologies into the manufacturing industry to create smart factories that are more efficient, productive, and cost-effective. It is characterized by the use of cyber-physical systems (CPS), the Internet of Things (IoT), and other emerging technologies to enable machine-to-machine communication and data exchange.
Different Types of Franchise Business Models
There are different franchise business models, each with its own pros and cons. Here are some of the most common franchise business models:
Average IRR of Mixed-Use Real Estate Deals
The average Internal Rate of Return (IRR) in mixed real estate can vary widely depending on a variety of factors, including the specific project, location, financing structure, and overall market conditions.
Financial Modeling Techniques for the Product + Subscription Business
Creating a financial model for selling a product that has an optional add-on subscription service requires careful consideration of several factors, including the price points of the product and the subscription service, the target market, and the estimated customer conversion rates.
Origins of Preferred Equity
Ok, so from my perspective, the use of preferred equity is often involved in joint ventures within the oil and gas or real estate deal industries. It can be used for all sorts of businesses though and really just represents a certain risk / reward profile for investors and operators. I thought it would be interested to give some history on how this type of equity came to be and what was the very first deal to use this finance structure.
General Economics of Recycling Businesses
Recycling businesses play an important role in reducing waste and conserving natural resources. The economics of recycling businesses can be complex, and can vary depending on a number of factors such as the type of materials being recycled, the market demand for those materials, the cost of collecting and processing the materials, and the competition in the industry.
Sustainable Products You Might Want to Build a Manufacturing Plant Around
If you are thinking about starting a manufacturing plant, the investment is high and it takes a lot of operational know-how. Also, you want to be sure whatever you are able to manufacturer is going to have long-term demand. There are many products that can be good long-term options to build a manufacturing plant for, depending on a number of factors such as market demand, availability of resources, and potential for scalability.
How to Determine Safety Stock When Inventory Forecasting
There is a whole process to performing good inventory forecasting, cash requirement planning, and general management of the entire cash conversion cycle of an inventory reliant business. Below are some general things to consider when defining a single step of that process. That would be the safety stock.
General Steps to Calculate Inventory Reordering Requirements for Your Business
First, let me say that the inventory forecasting Excel templates I have built are all in high demand since I started building them.
How Changing Interest Rates Impact Banks and Lending
The Federal Reserve (the Fed) is the central bank of the United States, and one of its primary responsibilities is to set monetary policy, which includes setting the federal funds rate—the interest rate that banks charge each other for overnight loans. Here are some interesting things about how the Fed's interest rate decisions can affect bank profits:
Best Visualizations for a Sales Pipeline Tracker
Visualizations can be tricky. If you want your sales manager or management in general to easily view a dashboard that displays exactly what the sales pipeline looks like at any given moment, you've really got to think about the layout, what numbers to display, what columns to use for your database, and what kind of charts / visuals to show.
What are the Downsides of Preferred Equity in Real Estate
You see these kinds of deals in real estate a lot because of the steady and predictable cash flows expected therein. However, preferred equity does have its risks and drawbacks.
Mobile Home Park Investing: Bull Case
Here we are taking a look at the bull case for buying mobile home parks (MHPs). Investing in these kinds of real estate syndication deals or being an owner / operator can check all the right boxes for certain individuals.
What is a Marketplace?
At the very root, a marketplace is simply a place where things are transacted. Usually, when this term is referenced it means a place where buyers and sellers can connect and exchange goods or services. There are offline and online marketplaces. You will find them in all shapes and sizes with all sorts of structures.
Laundromat Financial Forecasting Model - Excel Template
If you want to start a laundromat business, some things you probably want to understand are the required initial investments and resulting profits you can make over time. Additionally, you may want to value the business at some point in the future in order to complete a correct DCF Analysis. This template makes all of that possible and I walk you through how to fill out all forecasting inputs in the video below.
Some Approaches to Volume Discount Pricing
Volume discounting is a pricing strategy used by businesses to encourage customers to buy more by offering discounts for larger quantities. Here are some common methods for volume discounting:
Car Wash Valuation Considerations
Car wash businesses are generally valued based on multiples of earnings or revenue. Here are some common valuation multiples and factors to consider when valuing a car wash business:
Starting a Construction Business is Like an Orchestra
Getting into the construction business can be risky and take a lot of investment in equipment, payroll, labor, and general operating expenses. Cash flow is probably one of the most important things to manage and going into something like that without a good mental model of your business model and strategy is a mistake. You should have a pattern / template / game plan for the types of jobs you want to do and the resulting costs / benefits. Let's talk more about the business.
What is the Right Franchise for You?
Let's say you want to take advantage of a strong pre-existing brand that has all the mechanics worked out for process and training. This would mean you want to join an established franchise. There are lots of things to consider before jumping into the game, so we will go through those below.
Strategies for Expanding a Mobile Home Park
In the past, we've look at strategies for investing in mobile home parks and I have built a highly comprehensive financial model for mobile home parks. Here today, the goal is to evaluate possible strategies to look into for expanding an existing mobile home park. This is a great way to increase revenues and the property valuation.
General Valuation Methods for a Real Estate Brokerage
I have built quite a few real estate models. Most have to do with underwriting property and driving down to NOI, exit value, DCF Analysis, and cash-on-cash return after IRR hurdle waterfalls. However, I have also done a real estate brokerage feasibility model that looks at the operational side and drives fee revenues based on volume of properties closed over time / all the commission splits, has operating expense assumptions...…and a valuation at exit. Here today I'm going to talk about some general rules of thumb when valuing a real estate brokerage.
Spreadsheets Useful for Used Car Dealerships
A spreadsheet that could be helpful for a used car dealership industry could include the following elements:
Employee Scheduling Management Tactics
There are several ways to keep track of employee schedules by week, and the best method may depend on your specific needs and preferences. Here are some options to consider:
How to Determine Pricing for Your Equipment Rental Business
Determining pricing for your equipment rental company for different machinery can be a challenging task. There are all kinds of strategies, but generally you need to understand your costs and charge at least enough to cover that, then raise prices or become more efficient by lowering costs or both. This business is a bit like real estate investing where there is an initial large purchase, ongoing costs, and ongoing occupancy that drives rental revenues.
How to Structure Your Lending Businesses Loan Offerings
Determining the best loan configuration for a general lending business will depend on several factors, such as the type of loans being offered, the target market, and the financial goals of the lending business. However, here are some general tips that can help in creating an effective loan configuration:
Pros and Cons of Starting a Used Car Dealership
Starting a used car dealership may not have been the dream you had growing up, but it is a steady business that makes healthy margins. Sometimes, the average profit on a used car is more than what a dealership gets from selling a brand new car. This is because of the dealership getting favorable acquisition price points.
Average Margins in the Short-term Rental Business Compared to Long-term Rental Properties
The average margins of the short-term rental industry can vary widely depending on several factors, including the location of the rental, the type of property, the level of competition, and the cost of operations. All of the links in this article will take you to relevant financial models and templates specific to real estate.
European vs American IRR Hurdle Waterfall Structures
European-style and American-style internal rate of return (IRR) hurdle waterfalls are two different methods of calculating the distribution of profits in a private equity or real estate fund.
Who Typically Invests in Preferred Equity Deals?
Preferred equity is typically offered to institutional investors, such as private equity firms, hedge funds, and venture capital funds, as well as to high net worth individuals.
Pros and Cons of Starting an Equipment Rental Business
I've done lots of financial modeling and forecasting templates for various equipment rental businesses. The thought for this is pure cash flow. You invest cash in equipment, and then rent it out. Similar to the real estate industry in a sense, except you don't have as much operating expenses.
Cheapest SaaS Companies to Run
You are going to see a lot of freemium models below. Usually, if your SaaS value proposition is cheap to maintain, it is worth it to give customers a viable taste that is free while offering upgrade paid options.
Open-pit Mining Finance
One of the first financial models I built was a forecasting template for open-pit mining operators. It shows a basic initial investment schedule, assumptions for mining productivity / pricing of minerals / gems / metals and then provides a DCF Analysis of the opportunity. If you plan on starting or getting into the mining business, here are some more things you should take into account on the finance end of things:
The Right Conditions for a Preferred Equity Joint Venture
If you invest in real estate or other businesses that produce steady cash flows, it is more common to see preferred equity enter the stack. This could be hard or soft, but the high level understanding you need to have of it is that the investors have a claim on their equity repayment and usually a preferred return is due before cash is split elsewhere to the GP.
Some Considerations When Starting a Manufacturing Plant
Starting a manufacturing company can be a complex process, but here are some general steps to consider:
Repaying Multiple Loans - Some Strategies
According to Bankrate, the average American holds over $96,000 of debt (per 2021 data). That is often across multiple loans and varying interest rates as well as fixed / variable terms. There may also be balloon payments involved (more common in real estate transactions). Let's talk about a few ways to manage debt as an average person.
Also, you can use this multiple loan repayment calculator to test how increasing your payments can save on interest over time. This template works well when you have many loans of different interest rates and different remaining balances.
Marketplace Economic Modeling Approaches
I've done a few client specific network / marketplace financial modeling as well as a few templates for this industry. There are a lot of ways to create a financial forecast for a place that facilitates commerce between two or more parties. Note, some things just can't be simulated that well in Excel or Google Sheets, but some can.
How Interest Rate Swaps are Used
Interest rate swaps are a financial instrument that allows two parties to exchange cash flows based on different interest rates. Here are some interesting ways to utilize interest rate swaps:
Lending Business Compliance and Regulation Considerations
If you are starting a lending business, there are some regulations to consider. It will vary depending on what jurisdictions are being operated in, but pretty much every place will have some hoops that must be followed.
Examples of Volume Pricing in Various Industries
Volume pricing strategies are pricing tactics that offer discounts to customers who purchase larger quantities of a product or service. Here are some interesting things about volume pricing strategies for various businesses:
Sales Tracker - Printable Template
This is a very easy-to-use sales tracker that was made for basically any business that wants to keep track of their monthly and YTD sales as well as print out clean historical sales reports. I build it in Excel and a Google Sheets version is included that is also printable.
Seasonality in Financial Models
I have done many custom jobs and general templates where seasonality was a major factor in building the financial model. Including such logic helps to show what would happen over time to revenues, expenses and cash flows when accounting for big fluxes over the course of a year that are common to a given industry.
Advantages and Disadvantages of Starting a Mobile App Business
Mobile apps are fun, worldwide, and can lead to instant cash generation. At scale, these kinds of businesses work by expected conversions. There is a model to figure out ad spend, cost to acquire a customer, and average value of that customer over time. If the numbers make sense with a trial run, some of these companies will then spend 100s of millions to billions in marketing to make a slight margin.
SaaS and MRR - Monthly Recurring Revenue
This has become the engine that has grown much of the world in some sense. Monthly subscriptions are now a factor of nearly everyone's life as well as many businesses. Let's look at this metric a bit more deeply and see what we can see.
Airbnb Arbitrage Can be Exciting and Profitable
This is not a risk free business model, but let's get into some thing about it and you can check out a forecasting model for Airbnb arbitrage if you are serious about it and want to plug in assumptions to see how much money you can make scaling up to 100 properties.
Accounts Receivable and Payable Accrual Accounting Examples
I did a lot of payable and receivable accrual logic in this template designed to produce financial statements from a transaction log. It comes up in many businesses and if you want to optimize your cash conversion cycle as well as keep good records, it is important to track your receivables and payables on the financial statements.
Things to Think About When Forming an Advisory and Main Board for Your Startup
If a startup is trying to hire board members, there are several things to consider to ensure that they are bringing on the right people who can help the company succeed. A board can provide valuable guidance, support, and oversight to a startup's management team, helping to ensure that the company is operating effectively and in line with its strategic goals.
Owning A Significant Percentage of a Public Company's Stock, What are the Thresholds?
This is a bit of a high class problem, but if you have at least $10-50 million and are buying publicly traded equities, there are some things to consider when allocating your wealth.
What is the Simplest Preferred Return Joint Venture Structure?
The simplest preferred return joint venture structure is a partnership agreement between two parties where one party provides the funding for a project or investment, and the other party provides the expertise and management. The funding partner is entitled to receive a preferred return on their investment before any profits are distributed to the management partner.
Checklist Template for Real Estate: Buyers/Sellers/Agents
This is a general template that is useful for anyone buying or selling residential or commercial real estate. There are plenty of checklist slots to fill in and it is very easy to add more or remove items. The document is easily printable as well.
Financial Model for Starting a Cruise Ship or Boat Tour Business
This financial forecasting template enables wonderful planning for starting a cruise ship or general boat touring business. This industry has been growing for decades fairly steadily. People like to relax and see cool places. These are also great family trips and when you gain the loyalty of customers, they tend to stay with your cruise liner for life. It is not all smooth sailing and you have to be mindful of regulations as well as have a rock solid financial plan for how you are going to finance the startup costs and run a profitable operation.
Discount Rate and Finance - Everything You Need to Know
The discount rate is a crucial concept in finance that is used in various financial applications. Here are some of the key implications and uses of the discount rate in finance:
IRR Hurdles and Joint Venture Real Estate Investing
A joint venture real estate deal is an arrangement in which two or more parties come together to jointly develop, manage, and/or own a real estate property or portfolio. An IRR (Internal Rate of Return) hurdle-based waterfall is a common method used to distribute the profits or losses of the joint venture between the parties involved.
Pros and Cons of Self-Storage Real Estate Investing
Buying, holding, selling real estate is risky, but has a high reward for those that do it right and get a little lucky. Investing in self-storage is a newer niche in the industry, coming into existence in the mid 20th century. The concept is simple though, you buy and/or develop land that has simple storage units on it. People pay you a monthly fee to use the storage units.
Pros and Cons of Mixed-Use Real Estate Investing
Mixed-use real estate investing involves investing in properties that are designed to have multiple uses, such as a building that has retail shops on the ground floor and apartments on the upper floors. I've see an art museum that had bank offices on the upper floor. There are all sorts of possible combinations. Here are some of the pros and cons of mixed-use real estate investing:
Starting a New Business? Keep it Simple
Keeping things simple can lead to more predictable outcomes and increase the chance of success. This is ideal for a new startup business that needs to make strategic decisions, be able to understand the possible outcomes, and make sure their financial plan can handle the decisions. If you have a lot of complexity, it can be difficult to manage this.
Things to Consider when Selling Your Business: Valuation, Tax, Transitioning, and More
Selling a business is a complex process that involves many considerations. Here are some key factors to keep in mind when selling your business:
Advantages and Disadvantages of Starting a Bicycle Shop Business
Starting a bicycle shop (or bike shop) can be a rewarding business opportunity, but it also comes with its own set of advantages and disadvantages. Here are some examples:
When You Invest in the S&P 500 Index, Where Does the Money Go?
It goes to the stocks in that index relative to their market capitalization weight. I had thought about this awhile but never researched it myself.
How Do Early Repayments Effect Loan Businesses
Businesses that operate by lending money to business or individuals often have terms for the repayment of loans early. Sometimes there are fees the borrower must pay if they wish to repay early and sometimes there is no penalty at all. The question is, what are the actual financial implications for the lending business and what should be considered regarding such an event?
Various Ways to Conduct a Break-Even Analysis and Accompanying Analysis Tools
This can mean a few things. You have the amount of revenue you must have in order to cover all fixed and variable costs. There is also the break even month, which is the month it takes to recover the initial equity investment with free cash flow. We are focused on the former below.
When Should You Take Your Company Public?
Taking a company public is a big step and will come with a lot of added work, reporting, and transparency. There are all sorts of reasons why some companies want to go public. Some highly profitable private companies may choose the IPO route after many year of success and some research and development companies may choose an IPO strategy before profitability has even happened.
What is a Competitive Advantage in Business
Having a competitive advantage is extremely helpful in business, but what does that mean exactly? You must know what it is in order to spot a potential source and/or develop one.
Strategies for Investing in Mobile Home Parks
There are all sorts of great strategies for the affordable housing space. Jumping into mobile home parks can be one great option for many investors and operators to get some exposure. Here is a bit of general theories and strategies for MHP investing.
How to Start a Jewelry Business
The jewelry business can be a lucrative and rewarding industry, but it is also competitive and requires a strong marketing strategy and understanding of consumer trends. Jewelry design and craftsmanship are also important to stand out and offer unique, high-quality products. E-commerce and social media platforms can provide a low-cost way to reach a large audience, but it's important to differentiate yourself from other businesses and offer excellent customer service.
Incentivizing with Money: Employee Motivation Strategies
You could be a startup with a single salesperson or a large public corporation with 100s of sales people / account executives / legal teams / customer service departments / finance teams / engineers and executives. Either way, it is good to understand how to motivate through pay structures. Having happy people work, support, and sell your product or service can mean the difference between success and failure.
Pros and Cons of Starting a Driving Range Business
If you own property or want to buy property and invest in a fairly low initial investment business, then a driving range might be the ticket.
Best Practices in Cohort Analysis for Subscription Businesses
Performing a cohort analysis for recurring revenue businesses is not easy. It takes a trained professional to do it right and explain it. I am talking about this in the context of a company that has multiple years worth of data that wishes to understand key stats about their customers' behavior over time. Mainly, the retention, lifetime value, and customer acquisition cost as well as meta calculations and derivatives of those data points (LTV:CaC, CaC payback time)
How an eCommerce Business Can Improve Conversion Rates
An eCommerce business lives off conversions. If they are not happening, the business dies. This site you are on now relies on digital downloads. A simple conversion rate improvement from 1.5% to 3.0% automatically doubles revenue. It is hard to do though and hard to test what actually is working. There are many external factors that are not easy to account for.
Oil and Gas Well Drilling - 20 Year Cash Flow Financial Model
This financial analysis template is built for oil and/or gas well drilling, exploration and extraction. It has up to 46 drilling cohorts that allow for an arbitrary number of drill holes that take place over time and the resulting economics. The main purpose of the model is to create an accurate cash flow forecast based on a drilling deployment schedule. Includes options for a joint venture / waterfall with IRR hurdles.
How to Approach Marketing as a Startup
For a startup to get some important momentum that compounds on itself, there are some essential things that will help you. A first impression that people remember is insanely valuable. This is all marketing. A good long-term marketing strategy for startups would include a combination of tactics, including:
Construction Business: Operating Competitive Advantages
A construction business, also known as a general contractor, typically performs a wide range of services related to the construction, renovation, and repair of buildings and other structures. This can include activities such as:
Best Practices for Managing Accounts Receivable and Accounts Payable
Accounts receivable refers to the money that a company is owed by its customers for goods or services that have been delivered or used but not yet paid for. This is considered a current asset on a company's balance sheet. Accounts receivable is important for a company's cash flow and can be used as collateral for loans.
Balancing Growth and Stability in a Startup Business
As a startup business, it's important to strike a balance between growth and stability when it comes to financing. One strategy that can help achieve this balance is to pursue a combination of debt and equity financing.
Importance of Network Effects When Starting a Business
A network effect is a phenomenon where a product or service becomes more valuable as more people use it. This can be seen in various types of networks, including social networks, marketplaces, and communication systems.
What is a Cap Table and How is it Structured?
A cap table, short for "capitalization table," is a document that shows the ownership structure of a company. It lists all of the shareholders in a company, along with the number of shares they own and their percentage of ownership.
How Does a Leveraged Buyout Model Work and Pros / Cons
A leveraged buyout (LBO) is a type of financial transaction in which a company is acquired using a significant amount of borrowed money, with the acquired company's assets serving as collateral for the loans. The purpose of an LBO is typically to acquire a controlling interest in a company, and the buyer is usually an investment firm, private equity firm, or a group of investors. The goal is to achieve a high return on investment through the acquisition and subsequent management of the company, and to eventually resell the company at a profit.
Advantages and Disadvantages of Starting a PaaS Business (Product-as-a-Service)
There are several advantages to running a product-as-a-service (PaaS) business:
Challenges and Advantages When Starting an Apple Orchard Business
Starting an apple orchard business comes with some challenges, but there are also a lot of long-term rewards and benefits to running such a business as well.
Construction Loan Financial Modeling: Update to Real Estate Models
There are all kinds of methodologies and styles I have seen in my financial modeling career for forecasting the use of a construction loan or debt to help get a real estate deal funded. What I have built in the three templates below involves the best and most flexible configuration possible.
How to Invest in Hotels - For Real Estate Investors
Hotels have been around for a long time and will likely continue to be around. Even with all the Airbnb / short-term rental hype, there is still plenty of demand to stay at a hotel when traveling / vacationing. Below is some insight into what it takes to invest in hotels and a bit of history. I think knowing the history of an industry is important to understanding it and understanding something you are investing in is important.
Inventory Management Procedures
Overall, good inventory management is essential for maintaining a healthy and profitable business. It helps ensure that the right products are available to customers, while keeping costs and risks under control, and helps to support growth and profitability of the business.
Economics of Building a Golf Course
The financial impact of a new golf course can effect many people in many ways. The operator / developer is looking to benefit financially, the community is looking for a new fun activity, and the city would get higher tax revenues and boast an attraction for more people to come live there.
How to Sell Your House Direct to Buyer Using Seller Financing
I have built a great seller financing template that does include the tax calculations for basis and that will help you plan the finances around selling your house in this way. It has a few different options for loan terms (regular p+i, interest only with a balloon at the end, and a term loan (amortization with a balloon payment at some point earlier than the amortization term). All have different tax implications and cash flows.
What is a Better Business Model: Franchising or Licensing?
Franchising is different than licensing in a few ways, what is most suitable for your business will depend on many factors, scaling goals, and personal goals. Franchising and licensing are both ways for a company to expand its business by allowing others to use its trademark, products, and business model. However, they are different in several key ways.
Favorable Environment for Starting a Lending Business
A good environment for starting a lending business would have a combination of factors such as a stable economy, a sizable population with diverse credit needs, a well-developed legal and regulatory framework for lending activities, and a competitive market with room for new players. Additionally, having access to a diverse range of funding sources, such as banks and investors, can also be beneficial for a new lending business.
How Can a Company Determine a Price Point to Sell At
All sorts of things go into figuring out a price point. First, you have to pick your market (niche or not) and figure out what that marketing is generally willing to pay for things. Then it is just about the cost of goods sold or cost to provide the service and a target margin / volume. The general retail customer will be very sensitive to price, but if your customers are other businesses, this is less of a factor.
Dividend Investing Strategies
Dividend investing is a strategy where investors look to purchase stocks that pay dividends on a regular basis, such as quarterly or annually, with the goal of receiving a steady stream of income. Here are a few strategies that you can consider when dividend investing:
How to Build Wealth Through Multiple Channels
Generally I talk a lot about business, strategy, financial models, and spreadsheets, but what is the point of it all? Well, the point is to build wealth. That is why a financial model is relevant. It is a tool to help people and businesses that are trying to grow.
Types of Businesses that Require Little Management / Stress
There are many different types of businesses that require varying amounts of management and stress to operate, and the level of management and stress required will depend on a number of factors, such as the size and complexity of the business, the number of employees, and the industry in which the business operates.
Strategies for Starting a Vending Machine Business
There are a few different deployment strategies that you could consider for a vending machine business:
Competitive Advantages for Real Estate Investors
There are several competitive advantages that real estate investors can leverage to achieve success in their investments. Some of these include:
Successful REITs Do These Things
Real estate investment trusts (REITs) are required by law to distribute at least 90% of their taxable income to shareholders in the form of dividends. REITs typically distribute dividends on a quarterly basis. The amount of the dividends will depend on the REIT's financial performance and the discretion of its board of directors. REITs that have strong financial performance and a history of steady dividend growth may be able to pay higher dividends to shareholders. However, it is important to note that dividends are not guaranteed and the amount of dividends paid by a REIT can fluctuate from quarter to quarter. There are several strategies that a REIT (Real Estate Investment Trust) can use to be successful over the long term:
Most Valuable Competitive Advantages to Have in the Real Estate Business
There are several competitive advantages that can be beneficial in the real estate business:
Help for Startups Hiring New Employees: Negotiation and Financial Considerations
When hiring new employees for your startup, there are several things you should consider negotiating:
How to Negotiate Compensation with a Startup
When negotiating compensation with a startup, it's important to keep in mind that startups often have limited resources and may not be able to offer the same compensation as a larger, more established company. However, there are several things you can do to increase your chances of getting a fair deal:
What is More Important When Building a Successful Business, the Product or the Team?
It is difficult to say which is more important for a successful business, as both the product and the team are important in their own ways. The product is important because it is the product or service that a company or organization is offering.
Best Practices for Startup Revenue Projections
There are a few key steps you can take to build accurate revenue projections for a new business:
Good Spreadsheet Design Strategies
A good spreadsheet design should be organized, easy to read and understand, and free of errors. Here are a few specific things to consider when designing a spreadsheet:
Explaining Every Type of Depreciation Strategy
Depreciation expense is not just a trick for those that own real estate. There are various strategies involving depreciation that many businesses can use to lower their tax liability. Here are the general types of depreciation and when they can be used:
Strategies for Issuing Employees Equity
There are several important considerations to keep in mind when issuing employees equity:
Things You Must Get Right as a Startup Founder
As a startup founder, there are many important things to get right. Here are a few of the most critical:
Opportunity Zones and Real Estate Funds - How it Works and Deadlines
I would like to premise this with a few things. First, I have done a dynamic financial model for opportunity zone feasibility analysis for a private client. It is too specific to sell in my opinion so I never built a template for it. Second, just because a property is in an opportunity zone doesn't mean it is a great investment. There are many strategies surrounding this kind of real estate investing methodology and it is for the experienced.
Benefits of Operating a Recurring Revenue Business
Recurring revenue business models involve selling products or services on a recurring basis, typically on a subscription basis. Some examples of recurring revenue businesses include software-as-a-service (SaaS) companies, subscription box services, and membership-based businesses.
Types of Corporate Structure Strategies
The right corporate structure for a business depends on a variety of factors, including the size and type of the business, the owners' goals and preferences, and the potential tax implications. Here are some examples of corporate structures that may be suitable for different types and scales of businesses:
Corporate Structure Strategy: S-Corporation vs LLC
There are a few factors to consider when deciding whether to form an LLC or an S-Corporation. Here are a few things to think about:
Riskiest Startup Sectors to Invest In
If you are looking to invest in various sectors as an angel investor or a new venture capital firm, some areas are inherently more risky than others. Here are some things to consider before making any decisions:
Considerations When Giving Up Equity in Your Startup Business
When you are starting a new business, one big decision that must be made is if you are going to raise outside capital in the form of equity investments. There are several things to consider when giving up equity in your startup business to investors:
Is Cash Flow the Most Important Thing for a Business to Manage?
Cash flow is a very important aspect of managing a business, but it is not the only thing that is important. There are many other factors that can impact a business's success, such as its product or service offerings, marketing and sales efforts, operations, and financial management.
LIFO vs FIFO Inventory Accounting
FIFO (First In, First Out) and LIFO (Last In, First Out) are two methods of inventory accounting that are used to calculate the value of a company's inventory, as well as the cost of goods sold (COGS).
Subscribe to:
Posts (Atom)