Deck 9: Projecting the Financial Performance and Requirements for the Venture

Question 1

Which of the following is a way to shorten the sales cycle for complex B2B products?

A) Mitigate the risk by starting with a small implementation
B) Sell up the organization
C) Create a win-win for the customer
D) All of the above can shorten the sales cycle

Answer 1

D

Question 2

Which is NOT one of the assumptions driving a new venture's revenue model?

A) The close rate for first use
B) The repeat or continued usage by customers
C) The sales cycle to close each customer
D) All of the above are assumptions

Answer 2

D

Question 3

Why are monthly financial projections important for investors?

A) Because they show when you plan to realize your first revenue
B) Because investors want to see the financial conversion cycle
C) Because investors want to see your volume at roll-out
D) None of the above

Answer 3

A

Question 4

What is a sales cycle?

A) Time from exposure to the customer to the customer order
B) The time period of scaling operations
C) The time period to maximize profits
D) The first two years of your venture

Question 5

Many experts in the field advocate this approach for projecting revenue for a new startup?

A) A top-down approach
B) A bottoms-up approach
C) A lateral approach
D) A financial template

Question 6

What is the default format with regard to financial projections for startups seeking angel and/or venture capital?

A) Show only top-line revenue
B) Show monthly projections for the first two years and annually for outlying years
C) Show annual projections up to ten years
D) Show annual projections up to five years

Question 7

What is the PR firm's role when working for a new venture?

A) Get the venture visibility
B) Advertise
C) Provide partnering companies with financial drivers
D) Create communities around your product/services

Question 8

Which of the following is a difficult and nasty issue that can ensnarl the inexperienced entrepreneur even after they have made a sale to a customer?

A) Number of competitors
B) Bank financing
C) Revenue recognition
D) Strategic timing

Question 9

Which of the following is NOT a financial goalpost for a new venture?

A) The time to first dollar
B) The time to first profit
C) Potential evaluation for exit
D) All of the above are financial goalposts

Question 10

Which of the following statements is true with regard to a venture spending money?

A) Retaining good legal counsel is money well spent in a new venture
B) Spending money on a well-regarded accounting firm is money well-spent
C) A good PR firm can get a new venture visibility
D) All of the above statements are true

Question 11

Which of the following would represent adjustments to the working capital of a new venture?

A) Depreciation
B) Accounts receivable
C) Accounts payable
D) All of the above

Question 12

Which of the following is NOT a key deliverable in the financial projections of a new venture?

A) A five-year projected P&L
B) A five-year projection of cash flow
C) A five-year projected balance sheet
D) None of the above

Question 13

What is NOT a good way to shorten the cash conversion cycle?

A) Pre-payment from customers
B) Offer discounts for timely payment
C) Use a debt collection agency
D) Hire a bounty hunter

Question 14

Which of the following would be a standard line item in a P&L?

A) Net sales
B) The cost of goods
C) Net income
D) All of the above

Question 15

What does a monthly breakdown of expenses show on a P&L statement?

A) Cash burn and ramp up of expenses
B) Employed staff
C) Module efficiency
D) How to raise Series C financing

Question 16

Which of the following is considered a long-standing mantra of entrepreneurs?

A) It is always easy to replace a customer
B) Cash is king
C) Revenue is everything
D) Don't worry about expenses

Question 17

When it comes to finding assistance with regard to a new venture's patent, the venture should deal with what kind of attorney?

A) IP
B) Real Estate
C) Commercial
D) Merger & Acquisition

Question 18

What would not be a critical item on the P&L?

A) Cost of goods
B) Operating profit margin
C) Sales growth
D) Inventory

Question 19

One of the truisms for successful ventures is that ____________________.

A) entrepreneurial startups tend to succeed not fail
B) achieving recurring revenue is key to venture success
C) startups tend to attract venture capital at the early stages of the venture
D) None of the above are truisms

Question 20

What is NOT a smart way to improve a company cash position?

A) Collect prepayments from customers
B) Reduce inventory to just what you need for immediate production
C) Try to replace capital purchase with leases or rentals
D) Prepaying expenses

Question 21

If your _________ shows a large lag between when sales are booked and revenue is collected you may want to restructure how you collect payments.

A) Cashflow
B) P&L
C) Balance Sheet
D) Business Plan

Question 22

Facebook went public at over $35 a share for about a $100 billion market capitalization. Over the next three months, the stock price dropped in half. As a company that makes its money through advertizing on the Web, what is a key variable in Facebook's revenue model that worries investors and which is driving the stock price down? What is another key variable that is Facebook's hope for getting back to its IPO price and beyond?
(Answers: a) The advertizing rate per 1000 unique visitors has fallen by at least seven fold over the past seven years. b) Creating new streams of revenue that leverage Facebook's immense social network around the world.)

Question 23

How do investors generally estimate an exit valuation for a startup technology venture?

A) They add up all the sales over the course of five years, and that is the number.
B) They add up all the profits over the course of five years, and that is the number.
C) They look at the predicted balance sheet at year five and use the projected book value of the business as the number.
D) They look at projected revenues at the end of year five and apply and industry standard multiple to that number based on recent mergers and acquisitions. Then they study the business financials to make sure the business model can generate operating profit.

Question 24

What is one of the most common problems with venture revenue projections?

A) The projections tend to be too conservative
B) The projections tend to be too pessimistic
C) The projections tend to be wildly optimistic
D) None of the above are problems

Question 25

Using your term project venture, demonstrate your understanding of what constitutes a granular projection of revenue. What are the components of projecting revenues for your venture,
e.g. the key variables? If you have both product as well as services, how do the dynamics of revenue generation change for each type of revenue?

Question 26

Unlike the P&L and Cash Flow Statement the ________ can be kept to year-end figures for the purposes of startup business planning.

A) Startup Costs
B) EBIT
C) Income Statement
D) Balance Sheet

Question 27

Capital Investments include:

A) Land and buildings
B) Vehicles and industrial equipment
C) Investment rounds from Venture Capitalists
D) Friends & Family Rounds and Angel Investment Rounds