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ProjectionHub

SaaS Revenue Model

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We are ProjectionHub, a software that assists entrepreneurs in creating customizable and easy-to-read financial projections unique to their business models.

Google Sheet Integration

One of the ways in which we do this is by creating and integrating Google Sheet revenue models for each business model template. We structure a revenue model specific to a business type and allow you, the business owner, to customize it according to your company. Then, the user has the ability to import those revenue projections into the ProjectionHub web application in order to create accurate and custom financial projections unique to his/her business.

SaaS Business Model

If you would like to read more about SaaS business models and how to use ProjectionHub.Com to create financial projections for your SaaS company, see “Financial Projections for a SaaS Company”. This blog post is specifically designed to inform users on how to utilize our Google Sheet integration.

Saas Revenue Model

In the video below, we will walk you through how to edit and import the SaaS Google Sheet revenue model into the ProjectionHub web application to generate your customized financial projections. But first, I will simply provide you with a list of steps to integrate your Google Sheet revenue model:

  1. Add the Software as a Service business model
  2. Go to the “Revenue” tab and click “Add Google Sheet Revenue Model”
    1. You may have to connect your Google account then click this button a second time
  3. Click the green spreadsheet icon next to the “New Revenue” line item
  4. Edit any of the assumptions highlighted in blue on the Google Sheet to match your company’s assumptions
  5. Go back to ProjectionHub.Com, hover over the 3 dots to the left of the “New Revenue” line item, and select “Import Google Sheet Revenue”
  6. Add any expenses, assets, liabilities, and investors
  7. View your financial projections by clicking on the Dashboard icon to the left of your page

We hope this post and the following video proves to be helpful as you create your very own financial projections for your Software as a Service business!

Happy Projecting!

Jimmy John’s Financial Projection Template

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In 2017 Jimmy John’s Gourmet Sandwiches was the #4 fastest growing franchise according to Entrepreneur.com.  There are now 2,657 Jimmy John’s franchises in the U.S. and 84 new stores were added in the last 12 months alone.

In order to open a Jimmy John’s franchise you are likely going to need financing, and often times the bank will require financial projections for any loan for a new startup franchise.

To help you complete your financial projections “freaky fast” we have developed a financial model template specifically for Jimmy John’s within our ProjectionHub web app.

This blog post is going to help explain how to use ProjectionHub to create financial projections for your 1st or 50th Jimmy John’s unit.

Signup Instructions

  1. Feel free to learn more about ProjectionHub in general before signing up.
  2. You can sign up for a free trial by selecting the “Jimmy John’s” template here.
  3. If you have any questions about the model as you go, please email support@projectionhub.com

General Business Info

Once you sign up and confirm your account you will be asked to complete some general business info as seen below:

Adding the Jimmy John’s Business Model

Once you save the general business info, you will be able to add a business model.  If you don’t already see a Jimmy John’s Business Model added on this page, you can click the add Business Model button as seen below to add your first Jimmy John’s unit.

Jimmy John’s Revenue

Next you can click the orange button to Add Revenue to get started with your sales projections.

You will now have 2 options as you see in the image below:

  1.  You can click “Add Revenue” which will give you the ability to add projected revenue numbers for each month for your store.
  2.  Or you can click “Add Google Sheet Revenue” as circled in red above.  We have created a special Google Spreadsheet template specifically for Jimmy John’s franchises that will give you more control in terms of adding assumptions for your average ticket price and number of customer orders each month.
  3. If you decide to utilize our Google Sheet template please see this guide on how to enable the Google Sheet Integration.  You can see a screenshot of the Google Sheet below:

As  you are working on your revenue projections the following article may be helpful – according to CNN Money the average Jimmy John’s franchise has annual sales of $1.2 million and profit of $280,000.   This will vary greatly based on your location, so you may need to make some adjustments based on your specific market.

Jimmy John’s Expenses

Once you complete your revenue projections you can move on to your expenses.  There are 2 primary types of expenses:

  1.  Startup Expenses
  2.  Ongoing Operating Expenses

If you are creating a set of projections for a startup Jimmy John’s location, this list of startup expenses and ranges comes directly from Jimmy John’s.  Some of the items listed as startup expenses should be entered as expenses on month 1 and some are actually cash spent on assets like:

  • Leasehold improvements
  • Equipment
  • Buildings

If you have any of these types of expenses you will want to add them later as an “Asset” instead of an “Expense” on this page.

Jimmy John’s Operating Expenses

On the Expenses page in ProjectionHub you will be able to add/update your operating expenses.  You will notice that the Expense page will come with a number of standard expense line items along with a default monthly expense for most of the line items.  Obviously you can change any of these default expenses to reflect your specific situation.

Some expenses will be a % of your total sales, instead of a fixed monthly amount.

So as you see in the image above you can click the check boxes next to those expense categories and then in the drop down box with a red circle around it you can select “Apply Industry Ratios” and then click “Apply”

ProjectionHub is assuming the following % ratios for the following expenses:

  • Advertising – 4.5%
  • Royalties – 6%
  • Food Costs – 30%
  • Labor Costs – 25%

So when you click “Apply Industry Ratios” the system will take your projected sales and multiply by 6% to come up with your royalty expense for example.  See how this should work below:

Jimmy John’s Assets

Next you can move on to the assets section.  You will notice that the Assets page comes pre-loaded with the default assets that you might have as a Jimmy John’s franchise owner.

To add an asset, hover over the row, see the 3 dots on the left of the asset name, hover over, and click edit.

Next you will be able to add your Kitchen Equipment as an example.

You can enter in the details of your assets as seen below:

Jimmy John’s Loans

Next you can move to the Liabilities page and add a loan.  If you are going to borrow to help fund your startup costs, you can “Add a Liability” as seen below:

Jimmy John’s Investors

Next you can add any personal investment you will be making as well as investment from outside investors.  One common situation may be that you pay the $35,000 franchise fee with your personal investment.  In the example below I assumed that you paid the $35,000 franchise fee as a personal investment, and I selected that the investment was pre-existing which means that the projections will assume that you already paid the $35k prior to the projections starting, so this will show up on your opening balance sheet as equity.

Reports

Once you enter in all of your assumptions you will be able to review a number of reports.  Here is a sampling of some of the reports, tables below:

On the Dashboard page you will be able to download your projection Income Statement, Balance Sheet and Cash Flow projections to share with your lender or investor.

Adding Multiple Jimmy John’s Units

Finally, let’s assume you want to add another Jimmy John’s store in the future.  All you need to do is go back to the “Business Model” page and add another “Jimmy John’s” business model.  You can then label it Jimmy John’s Unit 2 and you can repeat the process.  You can add as many units as you would like over time.

Again, you can get started by creating a ProjectionHub free trial account today.

As you complete your projections please don’t hesitate to reach out to us with questions at support@projectionhub.com

Good luck!

Financial Projection Template for a Subway Franchise

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In 2017 there were more than 44,000 Subway franchises throughout the world.  This makes Subway the most popular franchise in the world.  If you are looking to open your first Subway store or your 10th store, you will probably need to secure some financing from a bank or an investor.

In order to secure a business loan for a startup you will likely be asked to provide a set of financial projections.  So we have developed a financial projection template specifically for a new Subway franchise within the ProjectionHub web application.

Our goal with this blog post is to walk you through the Subway financial projection template that we have created, so this will effectively serve as your User Guide to the Subway Franchise financial model.

Signup Instructions

  1. Feel free to learn more about ProjectionHub in general before signing up.
  2. You can sign up for a free trial by selecting the “Subway” template here once you sign up.
  3. If you have any questions about the model as you go, please email support@projectionhub.com

General Business Info

Once you sign up and confirm your account you will be asked to complete some general business info as seen below:

Adding the Subway Business Model

Once you save the general business info, you will be able to add a business model.  If you don’t already see a Subway Business Model added on this page, you can click the add Business Model button as seen below to add your first Subway unit.

Subway Revenue

Next you can click the orange button to Add Revenue to get started with your sales projections.

You will now have 2 options as you see in the image below:

  1.  You can click “Add Revenue” which will give you the ability to add projected revenue numbers for each month for your store.
  2.  Or you can click “Add Google Sheet Revenue”.  We have created a special Google Spreadsheet template specifically for Subway franchises that will give you more control in terms of adding assumptions for your average ticket price and number of customer orders each month.
  3. If you decide to utilize our Google Sheet template please see this guide on how to enable the Google Sheet Integration.  You can see a screenshot of the Google Sheet below:

As you work on your revenue projections, it may be helpful to know that, according to Business Insider, the average Subway franchise has annual sales of $490,000.  But this will vary greatly based on your location, so you may need to make some adjustments. In this section you can assume an average order amount and a growth rate of that average order amount.  Then you can assume the # of monthly orders and a growth rate for that as well.

Subway Expenses

Once you complete your revenue projections you can move on to your expenses.  There are 2 primary types of expenses:

  1.  Startup Expenses
  2.  Ongoing Operating Expenses

Subway Startup Costs

This list of startup expenses and ranges comes from FranchiseDirect.

As you know more about your specific costs you can update these numbers. Some of the items listed as startup expenses should be entered as expenses on month 1 and some are actually cash spent on assets like:

  • Leasehold improvements
  • Equipment
  • Buildings

If you have any of these types of expenses you will want to add them later as an “Asset” instead of an “Expense” on this page.

Subway Operating Expenses

On the Expenses page in ProjectionHub you will be able to add/update your operating expenses.  You will notice that the Expense page will come with a number of standard expense line items along with a default monthly expense for most of the line items.  Obviously you can change any of these default expenses to reflect your specific situation.

Some expenses will be a % of your total sales, instead of a fixed monthly amount.

So as you see in the image above you can click the check boxes next to those expense categories and then in the drop down box you can select “Apply Industry Ratios” and then click “Apply”.

ProjectionHub is assuming the following % ratios for the following expenses:

  • Advertising – 4.5%
  • Royalties – 8%
  • Food Costs – 30%
  • Labor Costs – 25%

So when you click “Apply Industry Ratios” the system will take your projected sales and multiply by 8% to come up with your royalty expense for example.

Subway Assets

Next you can move on to the assets section.  You will notice that the Assets page comes pre-loaded with the default assets that you might have as a Subway franchise owner.

To add an asset, hover over the row, see the 3 dots on the left of the asset name, hover over, and click edit.

Next you will be able to add your Kitchen Equipment as an example. You can enter in the details of your assets as seen below:

Subway Loans

Next you can move to the Liabilities page and add a loan.  If you are going to borrow to help fund your startup costs, you can “Add a Liability” as seen below:

CIT Direct Capital is one lender that specifically provides financing to Subway franchises.

Subway Investors

Next you can add any personal investment you will be making as well as investment from outside investors.  One common situation may be that you pay the $15,000 franchise fee with your personal investment.  In the example below we assume that you paid the $15,000 franchise fee as a personal investment, and we selected that the investment was pre-existing which means that the projections will assume that you already paid the $15k prior to the projections starting, so this will show up on your opening balance sheet as equity.

Reports

Once you enter in all of your assumptions you will be able to review a number of reports.  Here is a sampling of some of the reports, tables below:

On the Dashboard page you will be able to download your projection Income Statement, Balance Sheet and Cash Flow projections to share with your lender or investor.

Adding Multiple Subway Units

Finally, let’s assume you want to add another Subway store in the future.  All you need to do is go back to the “Business Model” page and add another “Subway” business model.  You can then label it Subway Unit 2 and you can repeat the process.  You can add as many units as you would like over time.

Again, you can get started by creating a ProjectionHub free trial account today.

As you complete your projections please don’t hesitate to reach out to us with questions at support@projectionhub.com

Good luck!

The 3 Types of Expenses for a Business

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Over the years, through working on a lot of different custom financial modeling projects it has become clear to me that there is not 1 simple way to project expenses for most businesses.  In general there are 3 types of expenses for any business:
1.  Fixed Monthly Expenses – Expenses that are just the same every month no matter what your revenue is.  For example, maybe your internet bill is going to be the same no matter what.
2.  Variable Expenses Tied to Revenue – Expenses that scale with revenue.  These are typically a percentage of revenue.  As an example from a different type of business, if you operate a restaurant your food cost will typically always be X% of revenue.  For your business maybe marketing, or payroll is going to be a % of revenue.
3.  Variable Expenses Tied to Inflation –  Some expenses basically stay the same, but should just plan on increasing maybe 2 to 3% each year.  This could be things like Rent, Phone bill, Utilities, Office Supplies.
A lot of people like to create year 1 of expense projections and then just add X% across the board for the following year.  The problem is that it just isn’t that easy.  To give yourself the most realistic set of projections I encourage you to think about each expense and put it into 1 of these 3 buckets and then base your modeling on the expense type.  If you have any questions about a particular expense and how to model it, please don’t hesitate to reach out at support@projectionhub.com.  Good luck!

Blue Apron Case Study

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If you pay attention to the stock market, you may have noticed a new company on the New York Stock Exchange. Blue Apron, a meal kit delivery service, joined the market back on June 29th. It opened at $10 per share, but has since dropped to $7.41 as of the market opening on July 20th (Check out how it’s doing today at https://finance.yahoo.com/quote/APRN?p=APRN). Why has it struggled? First, let’s get a good understanding of what Blue Apron provides customers.

Launched in 2012 by Matt Salzberg, Ilia Papas, and Matt Wadiak, Blue Apron eliminates the middle man to deliver fresh food that users can create with an in-home cooking experience. Blue Apron markets to those who are tired of eating out and value the in-home cooking experience that comes with making food with the family or someone special. It emphasizes the farm-to-table concept and aims to eliminate food waste.

Meal kits start as low as $8.99 per serving for a family of 4. Here’s an outline of their plans:

2 Person Plan Family Plan (serves 4)
  • 3 recipes per week
  • Either 2 or 4 recipes per week
  • $9.99 per serving ($59.94 weekly total)
  • $8.99 per serving (either $71.92 or $143.84 weekly total)
  • 6 meal options per week (3 vegetarian and 3 non-vegetarian)
  • 4 meal options per week (no vegetarian option)

The meal kit comes packaged in a refrigerated box so the food stays fresh. Blue Apron also offers a wine delivery service that come with suggestions for pairing wine selections with recipes. The site includes prep time, cooking tips and techniques, tools from the test kitchen (to buy), ingredients, and instructions for recipes.

Addressing Blue Apron’s Customer Base

Blue Apron takes some key metrics into consideration in analyzing their data. They calculate the number of customers “by counting the total number of individual customers who have paid for at least one Order from Blue Apron across our meal, wine or market products sold on our e-commerce platforms in a given reporting period.”* Here are some other metrics they use:

Metric Indicates:
Average Order Value Mix of product offerings chosen by customers, mix of promotional discounts, and purchasing behavior
Orders per Customer Customers’ purchasing patterns, including repeat purchase behavior
Average Revenue per Customer Customers’ purchasing patterns, including repeat purchase behavior

*

Blue Apron has discovered that 92% of their net revenue for 2016 and through March of 2017 has come from repeat customers.* Repeat customers are valuable to any business. First of all, it is much cheaper to retain a customer than obtain a new one. Secondly, repeat customers will often act as an advocate for your business if they had a positive experience.

Blue Apron is also aware that it experiences seasonal trends in sales. Seasonal trends refer to the business cycle that a company goes through, having more sales in one quarter than another quarter. For Blue Apron, it recognized that the first quarter is the time when it experiences the most customer engagement. Thus, the first quarter will also have the highest marketing expense as a percentage of revenue.

Blue Apron is on track to spend much more on marketing in 2017 than it has in the past:

Marketing Budget (in millions)  % Increase
2014 $5.9 N/A
2015 $31.1 527%
2016 $103.4 332%
3 months ending March 2016 $16.5 N/A
3 months ending March 2017 $50.0 303%

*

IPO

Now, why would Blue Apron want to be registered as a publicly traded company and go through the costly and detailed process of an IPO?

This post on Investopedia gives some basics of an IPO. The main reasons to do so are that an IPO creates capital for the business and can present a sense of credibility to the public. Companies must comply with detailed federal regulations and disclose their financial statements to the public. Publicly traded companies also have more liquidity for investors.

From a numbers perspective, Blue Apron has struggled. According to an article by the New York Times, it has never been profitable despite growing sales each year and suffers from some company abandonment- 60% of users quit after 6 months. Much of its costs have come from advertising and trying to grab a significant share of the competitive meal-delivery service market. Podcast advertising is a large expense for them.

Financial Analysis*

 Ratio 2015 2016 2017 (Thru March)
Liquidity Ratios      
Current Ratio 2.97 1.2 0.84
Quick Ratio 2.52 0.71 0.41
Activity ratios
A/R turnover 1893.85 441.56
Inventory turnover 17.65 2.42
Asset turnover 3.63 0.58
Profit margin -13.78% -6.90% 1.75%
Debt to assets 31.54% 77.52% 96.59%
ROA -25.00% 1.01%

Looking at a few financial ratios, we see that although it is true Blue Apron has never been profitable, they seem to be moving in the right direction when looking at profit margin, but that could change for the rest of 2017. Areas of concern are the falling current ratio and quick ratio which measure a company’s ability to meet current liabilities. They have both fallen over the past 2 years, so hopefully the influx of cash from the IPO can help with this.

Competition

Blue Apron faces a lot of competition, which is part of the reason it’s stock price has struggled. Some of the main players in the meal kit delivery service are HelloFresh, Home Chef, and PeachDish. The market it is competitive, and One reason analysts have pointed to is Amazon’s deal to buy Whole Foods for $13.7 billion. As a brand, Blue Apron must look to distinguish itself from the other meal kit companies. Businesses in this industry can separate themselves by their brand, reputation, customer satisfaction, price, product quality, reliability and timely fulfillment, and flexibility.

Most of the plans are similar in price, and it is often up to cooking experience, customer service, and packaging to distinguish among the competition. Blue Apron has tried to do so by developing a line of wines that pair well with recipes, but HelloFresh also did so as of May 2017. Blue Apron has a “Market” where users can buy supplies that Blue Apron cooks with in its test kitchen. While the “Market” seems like a good idea, it cannot compete with a company like Amazon when it comes to providing retail products. For example, Blue Apron’s Market offers a non-stick pan for $99. Amazon has the same pan for the same price, but if users are seeking lower prices, they can find a similar product for as low as $26.83 elsewhere on Amazon. My suggestion would be for Blue Apron to stick to what they mainly offer. Maybe instead of offering products it uses, it could start to offer the farm-fresh ingredients it uses in recipes for consumers to purchase individually. However, as a business expands its products and area of service, the number of competitors also increases.

In conclusion, we are not trying to persuade you to invest in Blue Apron. By thinking about the logistics and marketing aspects of the company, you can learn as an entrepreneur. Blue Apron knows the type of customer it attracts and uses specific metrics to measure customer attributes. When we do financial modeling for customers at ProjectionHub, we take these factors into consideration. Each plays a critical role in developing an idea for how much revenue your business will be able to accumulate. In starting your own business, you need to be able to track what customers purchase and how much they are willing to pay for products. Knowing what marketing tactics bring in the most revenue allows you get the most return on investment. Analyze your market. What does the competition do, and how can you distinguish yourself from it?

*The numbers and much of the data in this post about Blue Apron were found in it’s initial prospectus filed with the SEC at https://www.sec.gov/Archives/edgar/data/1701114/000104746917003765/a2232259zs-1.htm#ca16601_prospectus_summary.

Feature image: https://image-service.blueapron.com/render/q/quality/75/src/https%3A%2F%2Fmedia.blueapron.com%2Fhome_page%2FSplash%2F20170620_TopImage_640_Mobile.jpg

https://www.blueapron.com/

An Example Restaurant Financial Projection for an SBA Loan Application

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If you are looking for a bank loan or SBA loan for your restaurant concept, the bank is probably going to ask you to provide financial projections for your company.  If this is a startup restaurant and you don’t have historic financial results to base your projections on this can be a daunting task!

At ProjectionHub, thousands of business owners have used our app to create their own financial projections, but what we have found is that thousands more are overwhelmed at the thought of creating their own projections without some help.

So we have started to provide some basic consulting to help clients create a custom financial projection model for their restaurant.  Here is an example of one of our recent projects, so that you can get an idea of what the finished product looks like.

There are 3 key things that the bank is looking for in your restaurant projections:

  1. You have an understanding of your finances, not just food.
  2. Your projections are realistic – they might look at some financial ratios and compare to industry averages like these.
  3. Do your projections show sufficient cash flow to repay the loan.

If you would like some help developing a financial model for your restaurant that will meet the standards that the bank expects to see, tell us more about your project here.

Best of luck!

How to Download Financial Projections into Excel with ProjectionHub

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ProjectionHub users are now able to download their projected income statements, cash flow statements and balance sheets into Excel.

We are excited to release this long awaited feature that will allow users to have more control, flexibility and the chance to customize their financial projections to meet their needs.

To Download your Projections in Excel

  1. Go to the Dashboard
  2. Click “View Report”
  3. Then Click “Download Excel”

See images below:

view-report

download-financial-projections-in-excel

Financial Projections for a Startup Medical Practice

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If you are looking to start your own medical practice you probably have a lot of questions.  There are a number of great resources on the web that will help guide you through the process of starting up or writing a business plan:

  1. Medical Economics – Going Solo: Startup Basics
  2. Bplans – Example Business Plan for a Medical Practice

In this blog post I am going to focus solely on how to create realistic financial projections for your practice.  If you are looking to secure a business loan or investor, you will probably be asked for a set of financial projections.  Rather than going to get an MBA, my hope is this post will get you through the basics of projections to satisfy any lender or investor.

The Goal of Projections

The purpose of your financial projections is not to perfectly predict exactly how many patients you will have, what your expenses will be and how much money you will make.  The purpose of your projections are often to help convince yourself, lenders and investors that investing in your practice will provide a return on investment and that you won’t go Bankrupt!

So what should be Included

You should have the following statements for at least 3 years in my opinion:

  1. A projected profit and loss statement
  2. A projected balance sheet
  3. And a projected cash flow statement

Getting Started

We created a “Medical Practice” financial model for you to use with our financial projection software tool – ProjectionHub.  I will use this model to demonstrate how to create financial projections for your business.

Revenue Forecast

The first step in the process of creating a financial forecast is to project your revenue/billings.  This article is very helpful in explaining the details behind what doctors can earn per patient and how many patients can be seen per hour etc.

As an estimate the above article suggests that you can bill and receive approximately $35 per patient, so the primary leverage point is how many patients you can see per hour.  The average doctor meets with 4 to 5 patients per hour, and can meet with patients 7 hours a day, 4 days a week.

Let’s say you can meet with 4.5 patients per hour.

4.5 patients x 7 hours x 4 days per week x 4 weeks per month x $35 per hour = $17,640 in revenue per month x 12 months = $211,680.

That is your total revenue before taking into consideration any of your expenses.

That total revenue amount is probably not too enticing for many primary care docs, so in reality what ends up happening is that many docs work more hours and spend less time with patients in order to increase revenue.

Expenses

Once you have your revenue projected, you can enter your expenses into ProjectionHub as well.  We have included a pre-set list of expenses in the financial model that should be useful for you.  Here is an example of the input screen:
general-expenses-screenshot

Startup Costs

According to this article, you can expect startup costs of $70,000 to $100,000, your startup costs will include:

  • Furniture
  • Equipment
  • Copiers
  • Computers
  • Telephones
  • Practice Management Software

Loans and Investors

If you need some capital to cover some of your startup expenses of the first few months of operating expenses, you might either seek investment from friends and family, or other doctors, or you could apply for a small business loan.

Some of the larger national banks have specific areas of focus for medical practice loans like Bank of America.  You can add a business loan or investment into your projections as well:

Friends and Family Loan for Photography Startup

Cash Flow is King for Medical Practices

I think the most important thing to remember with a startup medical practice is that cash flow is king!  It is going to take a lot of cash to get a startup practice off the ground because you will have your startup expenses, but then once you start seeing patients there will likely be a 90 day cycle before you get paid.  You will see a patient, bill insurance or Medicare/Medicaid etc and then you can expect to wait a few months before you start getting paid.  You might read that it should take a lot less time, and it probably should, BUT I have seen so many similar businesses wait and wait and wait to get paid the first time by Medicare or Medicaid, so just expect a long wait.  That means you need to have the cash to operate the business, pay your rent, employee payroll, utilities, etc for 3 months while you wait to get that first reimbursement for services, so make sure you have plenty of cash as a contingency.

Reviewing your Projections

Once you enter all of your projection information in you can download your Profit and Loss, Balance Sheet and Cash Flow Projections from the Dashboard and determine whether you should give this a go or not.

Profit and Loss at a Glance

Is it Worth It?

So the question is, is it worth it?  Should you start your own practice, or should you work for someone else?  Here are some of the most recent stats on what doctors can make working for someone else.  I think the answer is that you might be able to make more money working for yourself, but it is also a lot more risky, so you shouldn’t make your decision based on money you should make the decision based on all of the intangibles.  This article is excellent at outlining the pros and cons of owning your own medical practice.

Best of luck!

Of course, if you have any questions at all, please email us at support@projectionhub.com and we will be happy to help.

 

Startup Phone and Tablet Repair Company – A Financial Model Example

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The phone and tablet repair business is a hot business to get started in right now.  It came in as #4 on the list of Best New Businesses to Start according to Business News Daily.  There are also a host of chains and franchise stores popping up around the country like:

In this article I am not going to teach you how to start a phone and tablet repair business, there are plenty of great articles that already do that like this one.

Financial Projections for a Startup Phone and Tablet Repair Company

Instead I am going to focus this article on the financial model and what projections might look like for your startup based on your proposed business model.  I will be using our app ProjectionHub to create financial projections as we go, you can sign up for a free trial here.

Revenue Projections

We will start with your sales projections.  The great thing about this industry is that there are a ton of revenue opportunities.  I am going to briefly talk through the different types of revenue that are most common as well as the most common channels in which to sell.

Repairs vs. Device and Accessories Sales

There are basically 2 primary sources of income in the phone and tablet repair industry.

  1. Repairs – You can repair devices and bill customers for the parts and services.
  2. Devices and Accessories – You can sell refurbished devices and/or sell accessories like cases to keep devices from breaking in the future.

Customer Segments

There are 3 primary segments of customers.  In my experience the best companies in this space are able to sell in all 3 of these segments and each segment can actually help your succeed in another segment.

  1. Retail – You can open a retail shop where customers with broken phones and tablets can walk in for repair services
  2. Corporate – You can sell repair services to schools or corporations that often have a fleet of devices that will require repairs and servicing
  3. Online – You can acquire devices that may be broken, fix them, and resell online via Amazon or eBay

Typical Steps to get Started

I think a good model to follow to start in this industry is

  1. Start by purchasing some broken phones online, try to fix them and resell online.
  2. Once you are comfortable and have some built in revenue from repairing and selling devices, you could look to open a retail store.
  3. The retail store will provide an opportunity for walk in repair customers, but it will also allow you to buy broken devices from customers that you might want to fix yourself and sell online.
  4. Once you have a local presence with your retail location you can approach the local schools or larger companies that have fleets of devices and look to establish a repair services relationship or contract with that organization.

Revenue Example

So now I am going to use ProjectionHub to create some year 1 projections for a phone and tablet repair startup.  Here are my key assumptions:

  1. I am assuming that you only buy broken devices, fix them and sell them online for the first 6 months
  2. In month 6 I assume that you will open a new store, take out a $20,000 loan and build out a store

Here is a sales projections graph for the first 12 months of a phone and tablet repair business:

sales-projections-phone-repair-company

Projected Expenses

I added minimal expenses for the first 6 months since you can buy broken phones online, at home, and fix them and sell them again online.  It isn’t until month 6 and 7 that expenses really start to kick in when you open your first store.  Here are my projected expenses for the first year:

phone-repair-business-expenses

Projected Profitability

In the first 12 months I am projecting a profit of approximately $10,000 before any owner’s draws.  So if you want to pay yourself in year 1 you should subtract your salary from $10,000.  I project just under $60,000 in sales for the first 12 months.  phone-repair-business-ratios

I wanted to make sure that you didn’t think you would get rich in the first 12 months, but I have seen a number of these companies become highly successful over a period of several years.

If you have any questions please email me at adam@projectionhub.com

ProjectionHub Formula Feature

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We recently added the ability to use formulas on ProjectionHub.  I wanted to provide some quick summaries of how to use formulas in ProjectionHub.

Percentage Growth Rate

If you want your sales or expense line items to increase at a steady percentage each month, you should follow these steps:

Step 1:  Hover over the field that you want to change and click “Use Formula”

Step 2:  A box will pop up as seen below:

Percentage Growth Rate

Step 3:  The orange highlighted box means that the field you are editing will take the dollar amount in the orange box from the previous month

Step 4:  Select the “x” multiply function from the drop down

Step 5:  Enter the percentage that you want the line item to grow by each month

Step 6:  Enter the number of months you want that line item to grow by that percentage

Percentage Decline Rate

Let’s say that some of your expenses or revenue line items are declining each month, you can also reduce an expense or revenue line item by a certain percentage each month.

Step 1:  Hover over the field that you want to change and click “Use Formula”

Step 2:  A box will pop up as seen below:

Percentage Decline Rate

Step 3:  The orange highlighted box means that the field you are editing will take the dollar amount in the orange box from the previous month

Step 4:  Select the “x” multiply function from the drop down

Step 5:  Enter a negative percentage that you want the line item to decrease by each month.  So to reduce a line item by 10% each month, enter -10.

Step 6:  Enter the number of months you want that line item to decrease by that percentage

Adding to Projections

Let’s say you want to add a specific dollar amount to a revenue or expense line item each month.  For example maybe you want to increase sales by $1,000 per month.

Step 1:  Hover over the field that you want to change and click “Use Formula”

Step 2:  A box will pop up as seen below:

Dollar amount increase in projections

Step 3:  The orange highlighted box means that the field you are editing will take the dollar amount in the orange box from the previous month

Step 4:  Select the “+” addition function from the drop down

Step 5:  Enter the dollar amount that you want the line item to increase by each month.  So to increase a line item by $1,000 each month, simply enter 1000.

Step 6:  Enter the number of months you want that line item to increase by that dollar amount

Subtracting from Projections

Let’s say you want to add a specific dollar amount to a revenue or expense line item each month.  For example maybe you want to increase sales by $1,000 per month.

Step 1:  Hover over the field that you want to change and click “Use Formula”

Step 2:  A box will pop up as seen below:

Dollar amount decrease in projecitons

Step 3:  The orange highlighted box means that the field you are editing will take the dollar amount in the orange box from the previous month

Step 4:  Select the “+” addition function from the drop down

Step 5:  Enter the dollar amount that you want the line item to increase by each month.  So to increase a line item by $1,000 each month, simply enter 1000.

Step 6:  Enter the number of months you want that line item to increase by that dollar amount

If you have any other questions about how to use the formula feature please reach out directly to support@projectionhub.com