Enhance your evaluation of new business acquisitions with this effective LBO model. It includes input frameworks for both Trailing 12-month (T12) and Trailing 3-month (T3) data, along with a variety of financing options. Tailor your analysis with entry multiples (based on EBITDA, Revenue, or Manual Entry) and exit multiples using the trailing 12-month EBITDA multiple. The model also includes detailed projections for expected revenue growth, cost of goods sold, operating expenses, and debt service coverage ratio. Streamline your deal analysis with this versatile financial model template.
Construction Business KPIs and How to Improve Each One
Key Performance Indicators (KPIs) for a construction business are crucial for measuring the effectiveness, efficiency, and success of various operations within the industry. Here are several important KPIs typically used in the construction sector:
Latest Custom Financial Models Added to SmartHelping Plus
This is the April 16, 2024 tranche of new custom spreadsheets that I have added to the SmartHelping Plus program. There are four new sheets here that range from manufacturing to enterprise SaaS and real estate development. You can see what real clients want built directly now.
Biomethane (biogas) Financial Model Template
This is my second big renewable energy financial model (the first was for a wind farm). It is exciting to feel like I am contributing in some way to a more sustainable future by using the skills I have. In this case, it is creating an awesome bottom-up financial modeling tool for the industry. This is a scaling and capacity-based model that deals specifically with feedstock processing, the related costs, and the resulting yield of such activity over time.
Diving Into the Details of a Semiconductor Manufacturer
The unit economics of a semiconductor manufacturer describe the revenue and costs associated with producing a single unit of product, such as a semiconductor chip. This analysis is crucial for understanding the profitability and financial sustainability of the manufacturing operations. Semiconductor manufacturing is notably complex and capital-intensive, involving high upfront costs but benefiting from economies of scale. Here’s a detailed look at the unit economics:
6 Reasons Financial Statements Include Depreciation Expense
The inclusion of items like depreciation in financial statements offers several benefits that enhance the insights these statements can provide about the financial health and operational performance of a company. Here's how depreciation plays a key role in this regard:
What are Non-cash Expenses?
Non-cash expense items are expenses recorded on a company's income statement that do not involve actual cash outflow during the accounting period. These expenses are accounted for to represent the cost of using or consuming an asset over its useful life or to adhere to accounting principles such as the matching principle, which states that expenses should be matched to the revenues they help generate. Non-cash expenses provide a more accurate picture of a company's operational costs and profitability by including the cost of assets that are not paid for in cash at the time they are consumed.
Why I Include Terminal Value in Startup Financial Model Templates
Including a terminal value in a 5-year startup financial model is crucial for several reasons, particularly when assessing the long-term viability and valuation of the company beyond the initial forecast period. Here’s why it’s important:
Maximizing Customer Lifetime Value: SaaS/Membership vs. One-Time Revenue Models Explained
The question of whether customers have a higher Lifetime Value (LTV) with a Software as a Service (SaaS) / membership model compared to a one-time revenue structure is multifaceted, involving considerations around customer behavior, pricing strategies, value delivery, and business sustainability. The core difference between the two models is that SaaS/membership models rely on recurring revenue from subscriptions or memberships, while one-time revenue models rely on single transactions for products or services.
Investing in Startups and Dilution
Dilution occurs to an investor's ownership percentage in a company when the company issues more shares, typically during a capital raise. Here's a step-by-step explanation of how it happens:
Payroll KPI Excel Template
Tracking the right Key Performance Indicators (KPIs) for payroll can significantly impact the efficiency and effectiveness of your payroll process, ensuring compliance, enhancing employee satisfaction, and contributing to better financial management. This template tracks the most essential payroll KPIs.
Direct vs Indirect Method for Cash Flow Statement
Ok accounting people, you may have heard that when doing a cash flow statement, there are multiple methodologies that can be used to come up with the actual total cash flow change in the period. When building this logic in a 3 statement model in Excel, with formulas, this consideration is relevant and important. I'll talk about what method I use in every single model you see on this site.
Overlooked Things in Real Estate Diligence That Can Cost You
Diligence and attention to detail are paramount in real estate investing for several reasons, as the complexity and significant financial stakes involved can lead to substantial losses if key aspects are overlooked. Here are why they're important and examples of commonly overlooked areas:
Wind Farm Financial Model Template
I'm jumping into the renewable energy space with this new financial model. It is specifically for wind farms / wind turbines. The revenue and expense assumptions presented new dynamic logical configurations to get a applicable financial feasibility study spreadsheet tool. These businesses are capital intensive and require precise planning in order to understand all the various unit economics / potential returns.
DCF Models and Valuation
Mastering DCF Analysis in Excel Financial Modeling
Creating a robust Excel model capable of performing Discounted Cash Flow (DCF) Analysis involves a nuanced understanding of valuation methodologies and the integration of DCF analytics. This guide delves into the critical aspects of constructing a DCF model, focusing on valuation considerations and the application of DCF analysis within financial modeling.
Job Bidding Excel Template
This is a great tool for contractors that need to refine their job bidding process. I made the template as granular as possible so there are inputs for each individual line item. The calculator looks at three types of costs: wages, direct costs, and fees.
Financial Model Templates: Scaling Models vs Single Operation Models
Many of the financial models I've built here on the site can be grouped into one of two categories. Scaling or single location. An example of 'scaling' would be a financial plan for opening 10 franchises over 5 years. An example of a single location is just like it sounds, a financial plan for opening a single laundromat or single mobile home park.
Historical Home Sales, Blockchain, and Financial Feasibility
I normally focus on just financial modeling templates, but I also dabble in a bit of crypto / blockchain research as well as real estate underwriting. Here are some ideas I've found about trying to integrate something with historical home sales so there is a single, cohesive record. I think that would be valuable, but not sure the economics work.
3 Statement Modeling and Capex
Here I am looking at one of the most common types of transactions included in a 3 statement model template. It is capital expenditures or Capex. In simplest terms, it just means money spent on items that have a useful life greater than 1 year. These are generally considered long-term fixed assets. Examples involve buying buildings, equipment, and property. I'll try to explain how to connect everything below.
Fair Value vs Historical Cost Accounting
Fair value and historical cost are two fundamental valuation methods used in accounting and financial reporting. Each approach has its advantages and disadvantages, and the choice between them can significantly impact how a company's financial health is perceived. Here's a comprehensive look at both methods, their pros and cons, and an analysis of which provides better information:
Update to Multi-Family Real Estate Model: Single Property Version
I actually walked through this update in real time as I removed property configurations two through four. You now have a single property version that comes with the download and a four property version.
Financial Model Templates for New and Innovative Businesses
I try to continually improve how I communicate the value of the financial models you will find on this site. One way to by finding ways to categorize the 100s of spreadsheets. Here, I'm going to focus on all the templates that were designed and/or can be utilized for new and innovative businesses. I consider a 'new' business something that didn't exist 10 years ago and I consider an 'old' business something that has been around for multiple decades. However, there could be models that represent a new or innovative method applied to an older business model, see below:
Real Estate Template: Adjusted Cost Basis
Calculating the adjusted cost basis of a property is a critical but complex process that involves several intricate steps and considerations. The adjusted cost basis is essentially the original purchase price of the property plus any improvements, less any depreciation, damages, or losses. This figure is crucial for tax purposes, particularly when selling or disposing of the property, as it helps determine the capital gains tax owed.
Pros and Cons of Starting a Home Service Business and Scaling
Starting a home service business, which can range from cleaning, landscaping, home repairs, to personal training, offers several advantages and challenges. The profitability of such a venture can vary widely depending on the specific industry, location, and business model. Here's an overview of the pros and cons, potential earnings, and steps to scale up a home service business.
Aligning Interests: Modeling Fair Real Estate Joint Venture Structures
Modeling a real estate joint venture (JV) in a fair way involves structuring the investment so that it aligns the interests of all parties and provides an equitable return based on the risk and capital each party contributes. The choice between preferred equity, an internal rate of return (IRR) hurdle, and simple return structures depends on the goals, preferences, and risk tolerance of the investors involved. Let's explore each option:
Pros and Cons of Starting a Daycare Business / Facility
Starting a daycare business can be a fulfilling venture, both personally and financially, for those passionate about child care. However, like any business, it comes with its set of challenges. Here's a comprehensive list of pros and cons to consider:
The Difference Between Required Rate of Return and Discount Rate
The discount rate and the required rate of return are fundamental concepts in finance, used to evaluate investments and determine their value. While they share similarities in their roles of assessing the attractiveness of investment opportunities, they serve different purposes and are used in different contexts. Let's explore both terms to understand their differences and similarities.
The Time Value of Money and IRR / NPV in Financial Modeling
Ok, we are going to talk about something that effects the personal saver as well as big corporate finance teams. That is the time value of money. Some people think it is voodoo (same with the IRR) calculation, but it is a very real concept that should be understood by anybody in finance. There are a lot of good ways to explain its significance and place within financial modeling / financial planning and analysis.
What "Four-wall" EBITDA Means - Restaurant and Retail Financial Modeling
"Four-wall EBITDA" refers to a financial metric used primarily in the retail and restaurant industries, although it can be applied to any business with physical locations. It measures the earnings before interest, taxes, depreciation, and amortization (EBITDA) of a particular location or unit, taking into account only the costs and revenues that occur within the four walls of that location. This includes sales revenue and direct operating expenses such as labor, utilities, and supplies, but excludes overhead costs like corporate expenses, taxes, and interest payments on debt.
Advanced Financial Modeling Configuration for Laundromat Template
I had a customer request to add a whole bunch of financing toggles and configurations to the Laundromat financial model. These were really cool so I decided to produce a second advanced version that had these items included. In order to understand them, a strong finance background is going to be required. It is easy to use the Excel template, but it is hard to understand the concepts if you've never heard of them before. See more below.
How Withdrawals / Deposits Effect a Hedge Fund High Watermark
Determining the ending period high watermark for an investment account when there is a withdrawal requires a bit of calculation, primarily to adjust the high watermark for the impact of the withdrawal. The high watermark is a concept used in the management of investment funds, particularly hedge funds, to ensure that managers are only paid performance fees on net new profits. Note, agreements can vary and every hedge fund could have a different way of handling redemptions/contributions after the initial investment.
Hedge Fund Fee Model Template: Soft Hurdle with High Watermark
I was genuinely surprised to uncover the intricate details involved in the 2 and 20 compensation model for hedge funds. It's fascinating to learn about the various configurations possible within this framework. The model outlined here incorporates the concept of a soft hurdle, which resets annually, and provides for the possibility of both an asset management fee and a soft hurdle option. Crafting these provisions into a legal operating agreement proves to be a complex task, emphasizing the value of a simplified model to effectively communicate these concepts to investors.
Just-in-Time (JIT) Inventory and Car Dealerships
The Just-In-Time (JIT) inventory management system, which aims to reduce inventory holding costs by having goods arrive as they are needed in the production process, has been widely adopted in manufacturing (see this made-to-order manufacturing financial model for more on that), notably in the automotive industry. Its application in car dealerships, however, presents a different set of challenges and opportunities. Whether JIT is the way of the future for car dealerships depends on several factors:
SaaS CFO Dashboard Template
As a CFO of a Software as a Service (SaaS) company, focusing on key financial and operational metrics is essential for driving strategic decisions, ensuring the company's financial health, and achieving long-term growth.
SaaS Rule of 40: Financial Analysis - EBITDA and Revenue Growth
The "Rule of 40" is a popular benchmark in the Software as a Service (SaaS) industry that evaluates the performance and health of a company. It serves as a guideline for balancing growth and profitability in a SaaS business. The rule states that a company's growth rate plus its profit margin should equal or exceed 40%. Here's how it breaks down:
Worst SaaS Businesses to Start or Acquire
Starting a SaaS (Software as a Service) business can be a lucrative endeavor, but success is not guaranteed. Certain types of SaaS businesses may pose higher risks or face more challenges than others. Here are some types of SaaS businesses that could be considered more challenging or less favorable to start, based on market saturation, high competition, significant regulatory hurdles, or a limited customer base:
What May You Want to Include on a SaaS CFO Dashboard
For a SaaS (Software as a Service) CFO dashboard, focusing on financial metrics that provide insights into the company's performance, growth potential, and financial health is crucial. Here are some key elements to include:
Why Banks Want to See Financial Projections for Your Startup
If you are trying to start a new business, one of the first things that is required to get the ball rolling is a request for funds from the bank (unless your own money). So, in most cases a financial projection needs to be submitted to the bank. This is a major source of my clients: Startups that need financing from a bank. Investors usually want to see financial projections as well.
Qualifications and General Responsibilities of a CFO
When I was going through college, I always thought a CFO must be a CPA (Certified Public Accountant) at the very least. As I made it through to more advanced finance classes and learned, it was clear this was not the case. Having strong general accounting knowledge is definitely important, but there are many aspects to being a CFO that have nothing to do with accounting rules, taxes, or regulations of financial reporting.
Do Good Managers Need Industry-specific Experience?
The necessity of industry-specific experience for a good manager can depend greatly on the context of the role and the industry itself. However, while industry knowledge can be very beneficial, it often comes second to possessing strong management skills. Good management techniques and the ability to lead, motivate, and effectively communicate with a team are generally considered more crucial. These foundational skills can be applied across various industries, and specific industry knowledge can be acquired over time.
Daycare Service Financial Model Template
When developing a comprehensive financial model for initiating a daycare service business, it's crucial to incorporate certain key assumptions. In my approach, I've factored in constraints related to the capacity of different types of care, along with two additional sources of revenue.
Financial Model Templates Grouped by Complexity Level
To understand the complexity involved in each category, I'll try to put a little explainer on why a given template is at a certain level. This is going to be roughly based on the amount of accounting and finance knowledge as well as industry-specific knowledge required to use the template to its fullest extent. There is a subjective element to this as it is my opinion about how much knowledge you need to understand a given template, but this should give general clarity as to what each template feels like to use. I've not included 100% of my templates here, but it should give you a good idea of what to look for when trying to understand various frameworks that are being used.
SaaS Pricing Models and Templates
SaaS (Software as a Service) pricing models vary depending on the needs of both the provider and the customer. Here are some of the most common models:
Loan Portfolio Analysis Template
Elevate your financial analysis with this cutting-edge Loan Portfolio Analysis Template, meticulously designed for Microsoft Excel. This sophisticated tool is a game-changer for financial professionals seeking to dive deep into their loan portfolio data with ease and precision.
Diving Into the Secrets of SaaS Success: Navigating Startup Costs and Equity Essentials
Starting a Software as a Service (SaaS) business involves various startup costs, which can be categorized into several key areas:
Financial Model Template for the Food Industry
In the dynamic and competitive realm of the food industry, the foundation of a successful business strategy often lies in the effective utilization of financial models. The right financial model template for creating pro formas in this sector depends on the underlying unit economics. This template will empower businesses to accurately forecast revenue, manage costs, and anticipate market trends. It integrates industry-specific variables such as seasonal demand fluctuations, supply chain logistics, and consumer spending habits, offering a comprehensive tool for financial planning and decision-making. Food industry professionals seeking to navigate the complexities of financial forecasting and strategy development will benefit from the below.
Modeling Negative Churn in SaaS Businesses
Some consider negative churn the holy grail of SaaS (Software as a Service). It simply means that there was an increase in MRR from existing customers that was greater than the MRR lost from churned customers. Hence, a negative of a bad thing, is a good thing.
Excel-based SaaS Financial Model
If you are looking for the best SaaS financial model template to meet your needs, you've landed in the right place. I can't tell you how many times my clients have simply said "I wish I would have found you first". When it comes to modeling out SaaS business cases in Excel, my frameworks have been heavily utilized in small and medium-sized businesses and I've even built a few for billion-dollar enterprises.
What is Possible with Excel Financial Models?
I have spent my entire professional adult life working in Microsoft Excel. The earliest exposure was in Accounting class during college. My first job involved working with income statement and balance sheets that were being prepared in Excel as a transition from an old software to a new software. I then moved into real estate analysis and from there, general financial modeling.
Cleaning Service Financial Model Template - Recurring Revenue Contracts and/or Flat Fee Jobs
I've done a janitorial cleaning financial model template in the past, but that was only geared toward hourly based billing and wages. This new model is for commercial or residential cleaning service businesses that operate with recurring revenue contracts and/or have flat fee jobs. All the assumptions are geared towards those revenue streams. You can create clean financial projections with ease by using this spreadsheet.
How Technological Advancements and AI are Effecting Accounting
Technological advancements, particularly in Artificial Intelligence (AI) and Blockchain, have brought significant changes and improvements to the accounting industry. These technologies are reshaping traditional accounting practices, making processes more efficient, secure, and transparent.
Valuation of a Private SaaS Business
Estimating the value of a private SaaS (Software as a Service) business involves considering a range of metrics that reflect its financial health, growth potential, market position, and operational efficiency. Some of the most important metrics to consider include:
Risk-adjusted Returns: Calculation and Usefulness
What Does Risk-Adjusted Return Mean?
Risk-adjusted return refers to the financial gains or performance of an investment, taking into account the level of risk that was taken to achieve these returns. It's a concept used in finance to understand how much risk is involved in producing a specific return.
Management Template: Pareto Analysis (80/20 rule)
Pareto Analysis, often referred to as the 80/20 rule, is a technique used for decision-making based on the Pareto Principle. This principle states that, for many events, roughly 80% of the effects come from 20% of the causes. In business and economics, it is used to identify the most important factors in a set of factors that contribute to a particular effect.
Financial Model Templates for the Most Profitable Businesses
The profitability of these industries can be attributed to a combination of factors that include market demand, specialized skills, and the nature of the services or products offered. Here's a breakdown of why these industries are considered most profitable:
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