Business Modeling

Financial modeling as a basis for management decision and action

Bonus Materials

You will receive completely structured and linked Microsoft Excel ™ Business Modeling Templates for your own use. During the workshop you will use them to develop your own business models for complete understanding of the principals involved.

Estimated time to complete this course:

3 - 5 hours
Lessons are segmented so that increments can be taken in as little as 12 minutes each.

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Course overview

Whether you are an entrepreneur or an "intra-preneur", or if your role is strategic alternatives or choices, you will profit from being able to see the financial implications of your ideas. To "sell" your ideas to others, you'll want to be able to quantify the reward and risk implications of strategic alternatives.

This 10-lesson course is designed to enable you as a non-accountant to build a usable financial model of a business. You'll use that model to determine and analyze proposed changes in the business, and to have a basis for selection among alternative strategies. You'll concentrate on the process and logic of modeling rather than on the numbers by which the model is expressed.

The course will provide sample linked spreadsheet models of three classes of business situations. You'll discuss in detail the process of getting estimates for starting up a new venture, for making distribution channel choices, and for deciding if an equipment business can insulate itself from a highly variable capital equipment market by adopting usage-based pricing.

Who should participate

This 10-lesson course is designed for Marketing and Product Management professionals as well as senior management in engineering or other operational disciplines. It is intended to serve the needs of those who want to understand and help effect the choice among alternative strategies having broad business impact. While quick overviews of financial statements are provided, this course assumes the participant has a basic understanding of prime financial statements.

What you will learn

  • Determine the necessary contents of a business model
  • Build a usemodel to get "what if" information
  • Use income statement, balance sheet and cash flow statements as templates for your model
  • Use financial ratios to build information
  • Go through the process of determining the financing requirements of a new venture
  • Go through the process of making a choice among direct sales, rep sales or distributors to reach a market
  • Go through the process of creating and evaluating a new paradigm of usage-based pricing in a capital equipment business
  • Analyze, use and refine the models you build to make and "sell" decisions

Course outline

  1. Essentials of Business Modeling
    • The elements of a model
    • How to Determine if your model is effective
    • Techniques of Modeling
  2. The Linkages Between Financial Elements
    • The Income Statement
    • Balance Sheet and ratios
    • Property, plant and equipment
    • Cash Flow
  3. Building the First Model
    • Case Study background
    • Rough it–refine it
    • Estimates
    • Critical Decisions
    • The Experience Curve
  4. Adding Model Data
    • Expenses
    • Building the Balance Sheet
    • Cash Flows
    • Financing
  5. The Model in Action–Analysis
    • "What if" simulations
    • Determining what the data means
    • Refining the model
  6. Spreadsheet "Startup" Model–Second Case Study
    • Making Advanced choices
    • Getting better at analysis and refinement
  7. Third Model–Outright Sale Versus Usage Fees
    • Model structural considerations
    • A Different kind of analysis
    • Re-thinking the metrics
    • New concerns
    • Refining the model for your exact needs