I was recently asked to model the financial risk in a television infomercial deal - live tv product sales, edible gift items for $150-500+). I used google sheets for easy group access. This is a useful kind of area to model. We needed to measure and test risk related to "missing the mark". It turns out that infomercialsand many live media contracts have non-linear penalties built in.
Rather than just thinking about how much you might sell and how much to spend on tertiary promotions to the event, models like this one are focused on hidden economic penalties. These kick in for things like: the bottom end of poor sales performance; bad quality, returns, and delivery issues; customer complaints over customer service;and more. In some cases who pays whom and how much they pay may flip about, depending how badly it goes. The moral of the model... Read carefully and test your downside thoroughly.
Business Modeling for manufacturing processes: You can add all kinds of cloud planning-ware to this process,,, but there's nothing like taking it down to the elements in a spreadsheet and working it out. Had a great time working though a bakery process lately. What fun! Human and machine factors begging AI in an artisan arena!
Startups can be better off if they optimize their organization for their markets and entry points. Economic modeling can help us test different market entry scenarios for important differences buried in the behavioral outcome of stakeholders. It's our modeling job to capture that by valuing the behavior in its economic context. For example. say you were trying to figure out how to make a market in alternative transportation modes for last mile logistics. If the market moves to your new mode, will it be better to run independent contractors or be fleet and operator managed? How does the source and type of economic motivation to the operators affect their behavior in the target market and at the entry points? What's your tough market behavioral and entry point question?. Join me in the discussion.
Clients often minimize the type of model they think they need to raise funds for a project. They say, if I can answer this one crucial question for investors, then I can raise the funds I need... Convincing clients to model the whole business rather than a single aspect can be challenging... See my recent blog post for more.
Sometimes a client just understands how to be examined, but in general it's no fun sharing financial data with a stranger. With or without an NDA, it's usually something considered private in a small company setting. So owners are reluctant to share their accounting system source files. But sometimes a savvy client does it right away despite the discomfort. They know it's the most efficient way to show the information being examined. I'm always willing to sign an NDA, and I will never share anyone's private data without their permission short of a court order or other force majeure. My colleagues and I maintain copies of Quickbooks apps and operate and support Quickbooks online and Xero accounting systems. See http://www.AlwaysLiveOnline.com for more information.
Update on farm-tech project modeling: I'm going to do a series of small models on crops for aquaponics focusing in on yield times. This is exciting. The models will show inputs and outputs and the affect of different propagation and incubation times on deep water culture yields and production planning. Fun!! Want to learn more? Respond to me here.
How do we model LLC equity units as opposed to shares for a corporation? Download my handy template free at http://www.alwaysliveonline.com
Wearing a couple of hats here... As finance chief of startup, www.FreshTableFarms.com, I have had to delve deeply into the production of microgreens and seedlings for the venture's production planning. We plan to publish some of the production models and data sets some time after the beta program is up and running in the hopes of spreading closed loop farming techniques to save water and transportation energy. Join the farm's email list or newsletter to be notified. http://www.FreshTableFarms.com
To find out about some of my more recent projects in finance and strategy, please visit my news page on my site: http://www.alwaysliveonline.com/news-links/
Hot off the business modeling press! Models now available for aquaculture farming businesses. Contact me for additional details.
Clients often minimize the type of model they think they need to raise funds for a project. They say, if I can answer this one crucial question for investors, then I can raise the funds I need... This fall, I am happy to be working with a new client in the green sector. We are working on a lease finance product for solar power and new LED technology in South Florida. This is an exciting project with a huge potential in the sunbelt. This group first approached me to audit their model for solar production and customer breakeven. But that is only one part of their story. Financial models are best used to tell the whole story and plan the future. This means modeling the related economics for all constituents in the story, not just for one production function. Investors want to understand the full risk profile of a venture, and this risk analysis cannot be done from the production module alone. Convincing clients to model the whole business rather than a single aspect can be challenging, but once a client sees the bigger picture sold in numbers relating to the market as well as operations, they discover a more rational and effective approach to startup and growth strategy and fund raising processes.