Class #13 Financial Statements 2011

Class #13 Financial Statements 2011 - A wise man, probably...

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Financial Statements Andrea Hershatter Entrepreneurship 436 A wise man, probably Yogi Berra, once said, “Making predictions is very difficult, especially when they are about the future.”
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Financial Statements Andrea Hershatter Entrepreneurship 436 Why Financial Planning Matters It is the basis of the go/no go decision It is essential to raising capital It is essential to analyzing expected cash flow and determining capital needs It highlights the sensitivity of various cost factors and underscores the vulnerability of assumptions As s umptions about cos ts and demand will drive all pro-forma s tatements !!!
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Financial Statements Andrea Hershatter Entrepreneurship 436 Estimates of Demand Outwards from internal capacity: First, estimate demand-based volume Then, use volume to extrapolate revenue streams How much volume can you generate initially? How will volume grow over time? Fluctuations based on seasonal demand linear increase increased frequency or size of purchases price advertising sales step-progression through additional markets and/or locations
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Financial Statements Andrea Hershatter Entrepreneurship 436 Estimates of Demand Inwards from external conditions: Reality check (# of users in each market segment) x (1 + rate of repeat purchasers) Potential future demand Effectiveness of education Competitor’s marketing Growth in pool This is the future size of the TOTAL market
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Andrea Hershatter Entrepreneurship 436 Estimates of Demand How big is your slice?! What are
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Class #13 Financial Statements 2011 - A wise man, probably...

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