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Financial Model, IT Services, Online Businesses

10-year Financial Projections, 5-year Financial Projections, Break-Even, Budgeting, Business Valuation, Cash Flow Analysis, DCF Model, Financial Analysis, Financial Model, Financial Modeling, Financial Projections, Financial Ratios, Financial Statements, Income Statement, IRR (Internal Rate of Return), NPV (Net Present Value), Valuation

This Excel spreadsheet template has been prepared to support IT Service providers which manage the IT Infrastructure of business customers in financial planning, company valuations, and fundraising.

This financial plan template covers a forecast horizon of 5 to 10 years – depending on the model version – and is based on bottom-up revenue and expense assumptions, where the model uses forecasts the yearly revenues of up to 30 customers.

Other assumptions include the number of workplaces per customer, direct costs per customer, employee overhead costs, operating costs, and many more detailed assumptions. These assumptions are then translated into a comprehensive financial plan that allows the business owner and management to obtain visibility of how the business should perform from a financial perspective over the next years.

The IT services model includes a variety of charts and tables to understand the financial business plan in great detail. Break-even analysis and the calculation of the relevant financial ratios and metrics (such as profit margin, IRR, and NPV) are included as well.

Fundraising and Valuation of an IT Service Business Provider

There are three use cases of this spreadsheet template: (1) Financial planning, (2) Fundraising, and (3) Business Valuation.

Financial Planning: The model can be used to obtain more visibility about the expected financial performance over the next years
Fundraising: The model calculates the required funding and also all relevant financial metrics (e.g. IRR, NPV) to investors when engaging in a fundraising exercise. The premium version allows for a better understanding of the Shareholder structure and respective IRRs for investors.
Business Valuation: The model template can also be used to calculate the company’s Enterprise and Equity Values based on Net Present Value (NPV) or Discounted Cash Flow (DCF) Analysis.

IT Service Provider Business Spreadsheet Template Structure

This solid and simple financial model excel template develops financial projections illustrating the forecasted profit margins and the expected returns to help decide whether to invest or not in engaging in an IT service provider business.

The model is structured with instructions and formulas that are simple and easy to follow, which allows users to run simulations by varying the input assumptions. The elements of this financial model template are enumerated below:

Terms contain the cell color codes and the terms and abbreviations used.

General Assumptions that are necessary for service provider financial planning are presented in the assumptions’ worksheets:

Currency
Growth and Inflation Rates
Income Tax Rate
Net Working Capital
Capital Expenditures, CAPEX Schedule, and Maintenance per year
Depreciation periods
Uses and Sources of Funds
Interest Rates
Financial Assumptions such as Interest Rates, Bank Covenants, and Dividend Policy
Exit and Valuation assumptions such as the Investment Period, Discount Rate, and Exit Valuation Multiples

Customer Assumptions show a list of up to 30 customers, their respective yearly revenues, breakdown of revenues as per revenue type and allocation, workplaces per customer, and direct costs percentages. From those inputs, this sheet will calculate the costs of IT services spent per workplace, direct costs, and a summary of gross profit per customer.

Executive Summary and Detailed Summary include charts to understand your IT Service Provider Business’ financial reports and business plan better and to answer the important questions such as:

How much Funding will be required
What is the Value of the Business?
How much would an IT service provider business’ profit margin be?
How much would be the assumed IT Spend per workplace of the business’ customers?
Which customers generate the most revenue?

These spreadsheets include a 10-year summary of the following:

Projected IT Service Provider Business Financial Statements overview – Income Statement, Balance Sheet, and Cash Flows Statement.
Levered and Unlevered Free Cash Flows calculating key financial feasibility metrics such as the Internal Rate of Return (IRR), Payback Period, Net Present Value (NPV)
Uses and Sources of Funds
Discounted Free Cash Flow Valuation
Forecasted Business Valuation and expected investment implied multiples
Top 10 Customers Revenue and Revenue Breakdown
Customers and Workplace Profit and Cost Analysis

In the premium version, the Executive Summary contains results of the Break-Even Analysis at chosen year, Shareholders’ Summary, and Sensitivity Analysis of either Enterprise or Equity Value calculated from Free Cash Flow to Firm.

Expenses sheet contains computations of Salaries and Wages, other Operating expenses, and the CAPEX schedule.
The CAPEX schedule illustrates the allocation of the amount of CAPEX spent by spreading their percentages through the current year up to the first. Maintenance CAPEX is calculated using the annual maintenance percentage and will only begin the year after the Initial CAPEX drawdown is at 100%. This sheet also shows the depreciation schedule and the yearly summary of Gross Fixed Assets, Depreciation, and Net Fixed Assets.

Financials worksheet contains a comprehensive and detailed 5 or 10-year, depending on the model version, an overview of the IT Service Provider Business financial plan.

Financial Statements – Income Statement, Balance Sheet, Cash Flow Statement
Financial Ratios and Standardized Income Statement
Profit Analysis as per Customer or Workplace
Projected Business Value
Unlevered and Levered Free Cash Flow
Financial Metrics,
Discounted Free Cash Flow Valuation, and
Equity Funding and Divided Policy Schedule

Debt Schedule is specially prepared to be presented to banks and investors for funding purposes. It contains financial ratios the banks and investors review when evaluating a project’s financial feasibility. The debt schedule comes with two debt facilities options and adjustments for drawdowns and repayments.

Monthly Budget is prepared to have a detailed assessment of the financial feasibility of an IT service provider for the first year by allocating percentages to distribute the profit and loss statements and the cash flow. This sheet aims to calculate the minimum funding required for the first year. Also presented in this spreadsheet are the calculations of the allocated monthly Income Statement, Free Cash Flows (Unlevered and Levered), and Projected Cash Balance.

Break-Even Analysis (only in Premium Version) shows the break-even calculations at a selected year at an EBIT level of the following:

What is the average workplace needed with an average revenue per workplace to reach break-even? or
What is the required IT Spent per Workplace at a given average number of workplaces reach break-even?

This sheet also shows a break-even sensitivity analysis.

Shareholders’ Cash Flow (only in Premium Version) is prepared to show the Equity Multiple and Investors’ IRR calculations, which helps determine if their funding and equity stake percentages would result in a profit on their end. The user can select which Cash Flow – Levered Cash Flow or Cash In/Out will be used to compute investment and proceed.

Prepare your own next IT Service Provider Business using this Financial Model!

This IT Service Provider Business Excel spreadsheet template contains valuable tools that allow users to analyze the financial business plan of an IT Service Provider Business in great detail.

The financial model template comes pre-filled with a 5 or 10-year forecast, which users may modify easily by updating the marked assumptions in blue or light blue.

The model, current version 1.2, is available in two fully editable Excel versions:

Premium Version