Financial plan

Now that we have created a story with our strategic plan, it is time to tell investors how you are going to generate revenue and show that you can deliver this in the near term. In this module we will explain what elements you should include when explaining your business model and other financial elements that you should be prepared to discuss with investors.

The first thing to keep in mind is that, as we explained in the previous module, our pitch deck is a concise document with the most important information. This also applies to our financial plan, so don't get lost in showing a lot of tables and numbers and focus on the key metrics of your business.

These key metrics are known as Key Performance Indicators (KPIs) and depend on the nature of the business. However, there are some standards KPIs investors might want to see related to all the drivers that influence the outcome. Here are the most significant ones, although not all of them necessarily apply to your business/industry:

Type	KPI
Revenues	Pricing, average order size, CAGR of revenue, churn rate, ARPU, Subscriber base, etc
Cost intensity	CAC, Fixed costs over revenue, COGS, Capex, Net working capital
Profitability	LTV, EBITDA margin, EBIT margin

If you need more information, all these terms and more are explained in detail in our VC dictionary (coming soon). Make sure you understand each assumption and are able to defend them, as you may well need to talk to potential investors about these assumptions and their impact on your business.

Don't just focus on explaining the now, show investors how you expect your company's finances to evolve over the coming months and years as the company reaches its milestones (we will come back to this term in the next module). Create scenarios that quantify the impacts of reaching each milestone or show the impacts of variations in KPIs. But now you may be wondering what period my financial plan should cover in early stage. Well, the industry standard is 3 years, of which at least the first 18 months should be planned monthly.

After having analysed many business plans of startups and other companies we can tell you that it is difficult to create a standard financial plan template, as it depends a lot on the industry and business model. However, we have created a flexible template that can be adapted to many industries and that we hope will be useful.

Click on the next and last module to find out how you should outline what you need from investors to make your business/idea a reality.

Key concepts:

• KPI