Entrepreneur’s Toolkit Tool 4: Financial objectives

Entrepreneur’s ToolkitTool 4: Financial objectives

Business Plan and Financial Objectives

Financial objectives help encompassing the financial scope of your project.

They provide credibility to the project by quantifying the strategic posture, i.e. the competitive strategic positioning + organizational structure, of the new venture

The entrepreneurial approach of financial objectives is specific and deserves a dedicated methodology.

=> SKEMA Business School, has designed and experienced on a variety of projects a unique tool supporting the entrepreneurial finance methodology : DEFI

The financial objectives of the BP helps quantifying …

Strategic posture

Revenue streams

Cost structure



Transaction revenues from one-shot customer payment

Recurring revenues from ongoing payments to deliver the VP or provide post purchase customer support

Revenue streams: The cash the firm generates from each customer segments under 2 types of streams


Cost structure: Describes all costs incurred to operate the BM

Cost-driven structure: focused on cost control efficiency Lower-price Value Proposition Maximum automation Extensive outsourcing

Value-driven structure: focused on value creation towards loyalty Premium Value Proposition Customization of services and relationships

BP and Financial Objectives – The DEFI tool


A tool designed to match the entrepreneurial mindset

Sales objectives on the targeted segments

likely to value the firm’s

proposition

objectives of investments needed to develop & deploy the

Value Proposition

Internal competences

needed to generate and maintain the

Value proposition

Clear financial statements to evaluate the

financial validity of the

entrepreneurial project

Ability to leverage debt

to finance growth +

commitments towards

shareholders

Strategic financial

indicators to monitor the

economic and financial

performance


sales forecasts (prices exclude VAT)

Volume Volume Volume Volume VolumeMS target MS target MS target MS target MS targetPrice Price Price Price PriceTotal 0 Total 0 Total 0 Total 0 Total 0Volume 0 Volume 0 Volume 0 Volume 0 Volume 0MS target MS target MS target MS target MS targetPrice 0 Price 0 Price 0 Price 0 Price 0Total 0 Total 0 Total 0 Total 0 Total 0Volume 0 Volume 0 Volume 0 Volume 0 Volume 0MS target MS target MS target MS target MS targetPrice 0 Price 0 Price 0 Price 0 Price 0Total 0 Total 0 Total 0 Total 0 Total 0

Total 0 0 0 0 0

Year 5

Segment 1

Segment 2

Segment 3

Year 1 Year 2 Year 3 Year 4

Sales objectives on the targeted segments likely to value the firm’s proposition

objectives of investments needed to develop & deploy the VP


Financing choices are influenced by your ability to leverage debt to finance growth + commitments towards shareholders

Company tax

Here you choose the way your business will be financed

Y0 Y1 Y2 Y3 Y4 Y5

Equity 0 0 0 0 0 0Debts 0 0 0 0 0 0

Shareholder current account repaiments

0 0 0 0 0

Debts parameters:Life 5 years

Rate (including

insurance)8 %

FINANCING CHOICES

COMPANY TAX COMPUTATION

Y0 Y1 Y2 Y3 Y4 Y5

Allocation of operating income before company tax

0 € 0 € 0 € 0 € 0 € 0 €

Taxable basis calculation(after inclusion of deficit periods)

Company tax(1/3 of taxable basis)

If no calculation of the campany tax in the boxes below, the annual operating profit after tax is considered by the forecast model as being equal to the annual operating profit before tax)


Staff objectives:Internal competences needed

Financial statementobjectives

Amount and distribution of employee's wages (50% charges) in €Do not add any linesJobs and remuneration have to be reconsidered each year

Type of staffNumber of

people

Gross monthly wage without

charges

Annual with charges

R & D. Production Sales Administration

Managers 1 0 € 0% 0% 0% 0% 0 €R&D engineers 0 0 € 0% 0% 0% 0% 0 €

Production 3 0 € 0% 0% 20% 0% 0 €Sales representatives 0 0 € 0% 0% 0% 0% 0 €

Administration 0 0 € 0% 0% 0% 0% 0 €Supports 0 0 € 0% 0% 0% 0% 0 €

Position 7 5 0 € 0% 0% 0% 0% 0 €Position 8 0 0 € 0% 0% 0% 0% 0 €Position 9 0 0 € 0% 0% 0% 0% 0 €

Position 10 0 0 € 0% 0% 0% 0% 0 €

Total annual costs 0 € 0 € 0 € 0 € 0 €Difference if wrong allocation 0 €

Proportion in %

T0 : Preparation period for the launch

FINANCIAL COMPILATION Do not input any data in this file

1) INVESTMENTS AND AMORTIZATION

Y0 Y1 Y2 Y3 Y4 Y5

Investments 0 € 0 € 0 € 0 € 0 € 0 €

Investments cumulated 0 € 0 € 0 € 0 € 0 € 0 €

Amortization 0 € 0 € 0 € 0 € 0 €

Amortization cumulated 0 € 0 € 0 € 0 € 0 €

2) ANNUAL INCOME STATEMENTSY0 Y1 Y2 Y3 Y4 Y5

REVENUES FROM OPERATIONSSales 0 € 0 € 0 € 0 € 0 € 0 €Grants 0 € 0 € 0 € 0 € 0 € 0 €Increase in inventories of finished products 0 € 0 € 0 € 0 € 0 € 0 €Increase in inventories of merchandises 0 € 0 € 0 € 0 € 0 € 0 €

Total revenues from operations 0 € 0 € 0 € 0 € 0 € 0 €


Financial objectives:a key part of the Light BP !

Questions

Q1: What is the correct assumptiona) Financial objectives in a business plan need to be presented in order to translate the

characteristics of the project into a financial perspective b) It is impossible to represent the content of the new venture’s strategy in the financial objectivesc) In the pitched business plan, it is mandatory to introduced in detail the balance sheet and the

income statement layout.

Q2: In a pitched business plan, financial objectivesd) Provide information on your ability to raise fundse) Provide reliability of your strategic positioningf) Provide a financial picture of the resources and revenues needed to implement the business

model of the project

Q3: Which of the following assumptions is not correctg) The revenue streams quantified in a business plan are either transaction revenues or recurring

revenues or bothh) Revenues described in a pitched business plan encompass all streams of businessi) A cost-driven cost structure characterizes a lower quality value proposition as opposed to a value-

driven cost structure

Documents

Entrepreneur’s Toolkit Tool 4: Financial objectives