NailTheNumbers.comHOW TO: SKETCH OUT YOUR STARTUP COSTS

AND CASH FLO PROJECTIONS©2014-2015 The Kolo Project, Inc. | Let’s Talk Money Campaign

Playbook No2

Released: February 24, 2015

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ALL GOOD? READ ON>>>

THE PLAYBOOK PROS

Taunya Woods Richardson | Campaign Creator and Chair, Let’s Talk Money @TTaunya // nailthenumbers.com // @NailtheNumbers

Taunya’s reputation as the Startup’s Money Maven is built on her ability to dive into the uncomfortable topic of finance with tremendous transparency, empathy and humour. She is a thought leader, solution architect and financial literacy champion, with the rare ability to both motivate entrepreneurs and equip them with actionable change strategies to better control their finances and outcomes.

25 Years Experience ▫ Social Entrepreneur ▫ Investor ▫ Fund Manager

“DRAWING IS THE ROOT OF ALL KNOWLEDGE.” MICHELANGELO

I’ve come to realize the root of meaningful cash flow projections don’t start with spreadsheets, but

rather by first physically sketching out your ideas, assumptions and estimates.

Taunya Woods Richardson // @TTaunya

Campaign Creator and Chair, Let’s Talk Money @NailtheNumbersSO, LET’S GET SKETCHING>>>

WHICH BIZ MADE ME THE MOST $?

BIZ ACatering1 Client

Billed by Project$15,000 per Project

BIZ BConsulting7 Clients

Billed Hourly $125 per Hour

BIZ CBusiness Support

Services 2,500 Clients

Billed by Board $1,500 per Board

$540,000 $210,000 $3,250,000

60 hours/month/$100$72,000 / Draw +

$220,000 / Profit +$100,000 / Sale

140 hours/month/$125$210,000 / Draw

$0 / Profit$0 / Sale

240 hours/month/$21$60,000 / Draw

$0 / Profit$0 / Sale

WHAT YOU LEARN FROM CASH FLOWS*

*AKA… Pro Formas or Projections // Your budget for the business

If your concept is financially viable

Which of your products/services are most profitable

The starting point for your pricing strategy

The business’s break-even point

How much working capital you’ll require

The seasonality of your business

When to expand the business / hire employees

Where you’re making/loosing money

STEP 1: START WITH THE END IN MIND

When do you plan to exit

How do you plan to exit

For how much

To whom

©2014-2015 The Kolo Project, Inc. | Let’s Talk Money Campaign

“Raise twice what you need and plan on

it taking twice as long.”

Sam Hogg, Venture Partner

Open Prairies Ventures

“Fundraising sucks and it

never really ends until the

day you sell.”

@SamHoggVC #FinLitBootcamps

STEP 2: MAP YOUR JOURNEY

Starting with the end in mind, what milestones will get

you to your final destination?

Product Development

Growth (team, geography, infrastructure)

Capital Requirements

©2014-2015 The Kolo Project, Inc. | Let’s Talk Money Campaign

"You can eat an

elephant – just

one bite at a

time."

-Unknown

STEP 3: SKETCH OUT YOUR START UP COSTS Space / Leaseholds Business Set Up Legal / Accountant Fees Product Development Software / Hardware Equipment and Supplies Inventory Employee Recruitment

and Training Working Capital

©2014-2015 The Kolo Project, Inc. | Let’s Talk Money Campaign

TIPS

Get estimates /purchase orders

Be specific

Include taxes

Don’t forget processing and shipping

Don’t bank on friends and family – Budget

Track and record your expenses

Know why you need the money

@TTaunya @NailtheNumbers #Let’sTalkMoney

STEP 4: BREAK OUT YOUR REVENUE STREAMS*How will your business make money from its products and services?

*AKA… Profit Centres

Products / Fee for Service

Community Access

Subscriptions

Advertising

Commission / Transaction Fee

Licensing

©2014-2015 The Kolo Project, Inc. | Let’s Talk Money Campaign

Whatever you do… don’t lump all

your revenue streams into one

line item labeled “Sales”!@TTaunya @NailtheNumbers

STEP 5: CALCULATE YOUR COGS*

*AKA…Cost of Goods Sold

Materials

Direct Labour

Transaction Fees

Shipping / Transportation

Project Delays

©2014-2015 The Kolo Project, Inc. | Let’s Talk Money Campaign

“My single biggest

mistake with my first

business was with pricing.

I didn’t take into account

all the hidden costs.”

Sarah Shaw, CEO Entreprenette

STEP 6: SET A PRICE-POINT

Cost of Goods Sold Pain Killer or Bandaid Personal Knowledge Competition Industry Statistics Market Research Trials and Testing Operating

©2014-2015 The Kolo Project, Inc. | Let’s Talk Money Campaign

“I though you just sort of doubled

everything but that’s not correct.”

Sarah Shaw, CEO Entreprenette

STEP 7: DETERMINE THE EBB AND FLOW OF SALES How many units will you sell and when?

What’s the seasonality of your product/service?

When will revenues be received?

What’s your capacity?

©2014-2015 The Kolo Project, Inc. | Let’s Talk Money Campaign

STEP 8: FACTOR IN MONTHLY EXPENSES

Salaries, Wages and Benefits

Employee Development / Welfare

Professional and Consulting Services

Advertising and Promotion

Space and Operating

Bank Fees

Insurance

Travel and Vehicles

Fundraising Activities

Loan Repayment and Interest

Income Tax

©2014-2015 The Kolo Project, Inc. | Let’s Talk Money Campaign

Myth: You can rely on social media to build virality and attract customers for free.

Reality: It’s NOT free. It will take unbelievable amounts of time. Bank on 6 months to

a year before you’ve got even slight momentum.

Drew Williams, Author of Feed the Startup Beast

STEP 9: WORKING CAPITAL* NEEDS

*AKA… your Runway

Income – Expenses = Net Profit

At what point does your business turn a profit?

How much money do you need to keep you flush

until you reach that point?

©2014-2015 The Kolo Project, Inc. | Let’s Talk Money Campaign

“It doesn’t take a CPA to

figure out the longer you

take to launch, the longer

you go without money

coming in.”

Drew Williams, Author of Feed the

Startup Beast

STEP 10: CIRCLE BACK

©2014-2015 The Kolo Project, Inc. | Let’s Talk Money Campaign

Add working capital needs to Start Up Costs

Add loans/equity to the Income in your Cash Flow

Record your Start Up Expenses to Expenses in your Cash Flow

Build year 2,3,4… of Cash Flow projections taking into account your

milestones and what investors are looking for

NOW WHAT…

Do you have questions? Want to connect with the Pros, visit us at SpreeCast for a list of upcoming Playbook Drills, including HOW TO SKETCH OUT YOUR STARTUP COSTS AND CASH FLO PROJECTIONS.

Looking to get it done and make it happen? Book a Bootcamp. Action-packed and highly-interactive, you’ll work hard and sweating buckets, but you’ll take great pride in the end result. LET’S TALK CASH FLO PROJECTIONS + STARTUP COSTS INCITIES IN ACROSS CANADA

CHECK OUT UPCOMING BOOTCAMPS

CHECK OUT UPCOMING DRILLS

Keep me posted @TTaunya or taunya@letstalkmoney(dot)biz