Numbers investors will examine.
WHAT THEY ARE FOR
Demonstrating that you understand the business, not predicting the future.
WHY THAT DISTINCTION MATTERS
Everyone knows projections are wrong; what is assessed is the reasoning.
WHAT TO BUILD FROM
Assumptions, stated explicitly.
WHAT ASSUMPTIONS TO STATE
How customers are acquired, and at what cost What each is worth How many stay What it costs to deliver What the fixed costs are
WHAT TO BUILD UPWARD
From units, not downward from market share.
WHY
Downward projections from market percentages are not credible.
WHAT A BOTTOM-UP MODEL LOOKS LIKE
Customers acquired per month, from defined channels, at a defined cost.
WHAT TO SHOW
Revenue Costs, direct and fixed Profit Cash position, monthly
WHY CASH SEPARATELY
Profitable businesses fail from cash, and investors know it.
WHAT PERIOD
Enough to show the money running out and what happens before.
WHAT TO INCLUDE
When you run out of money at the current rate.
WHY
It is the first thing an investor calculates.
WHAT TO AVOID
Hockey-stick growth with no mechanism Costs that do not grow with revenue Omitting your own salary
WHAT TO PREPARE
A worse case, and what you would do.
WHY
It demonstrates judgement.
WHAT TO KNOW
Every number, and where it came from.
