Our financial model is a tool used to forecast and analyze the financial performance of a locksmith business. It provides a comprehensive representation of the business’s income, expenses, and cash flow over a 10-year period. The financial model incorporates various assumptions and variables to generate projected financial statements, including the income statement, balance sheet, and cash flow statement.

Here’s a description of a financial model tailored for a locksmith business:

The financial model for our locksmith business is a dynamic and robust tool designed to forecast and evaluate our financial performance. It incorporates key assumptions and variables to provide insights into our revenue generation, expenses, profitability, and cash flow.

Key Components of the Financial Model:

Revenue Projections: The financial model estimates our revenue based on factors such as the number of service calls, average transaction value, and pricing strategies. It allows us to understand the impact of changes in the service mix or pricing structure.

Expense Forecasting: The model captures various expenses, including employee salaries, equipment maintenance, inventory replenishment, marketing costs, and overhead expenses. It enables us to analyze the cost drivers and make informed decisions to optimize our expenditures.

Profitability Analysis: By combining revenue projections and expense forecasts, the financial model calculates our gross profit margin, operating profit margin, and net profit margin. This analysis helps us understand our profitability drivers and identify opportunities for improvement.

Cash Flow Management: The model projects cash inflows and outflows, taking into account factors such as payment terms, accounts receivable, accounts payable, and capital expenditures. It allows us to monitor our cash position and ensure adequate liquidity to meet our operational and investment needs.

Benefits of the Financial Model:

Decision Making: The financial model provides valuable insights for decision-making. It helps us evaluate the financial viability of potential investments, assess the impact of pricing changes or cost-saving initiatives, and make informed strategic choices.

Financial Planning: With the financial model, we can develop comprehensive financial plans, including budgets, sales targets, and expense allocations. It serves as a guide to track our progress and make adjustments as needed.

Investor Communication: The financial model enhances our ability to communicate our financial projections and performance to potential investors or lenders. It demonstrates our understanding of the business’s financial dynamics and supports our credibility.

Overall, our financial model is a powerful tool that enables us to assess and manage the financial aspects of our locksmith business. It provides us with valuable insights, helps us make informed decisions, and supports our long-term financial success.

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MODEL GUIDELINES

So a quick overview of the model, in the contents tab, you can see the structure of the model by clicking on any of the headlines to be redirected to the relevant worksheet.

On the manual tab, you are able to feed the general information for the model, such as: project name & title, the responsible, timeline of the model, and the date and currency conventions.

Additionally, there is a description of the color coding of the model in the same tab. Inputs are always depicted with a yellow fill and blue letters, call up (that is direct links from other cells) are filled in light blue with blue letters, while calculations are depicted with white fill and black characters.

There is also color coding for the various tabs of the model. Yellow tabs are mostly assumptions tabs, grey tabs are calculation tabs, blue tabs are outputs tabs (that is effectively results or graphs), and finally, light blue tabs are admin tabs (for example: the cover page, contents, and checks).

Moving on to the Inputs: detailed inputs for revenues, price of the services provided, costs split between direct costs (for the various services provided as percentage margins, client-facing employees) and indirect costs (such as utilities & communications, rent, insurance, outsourced staff, advertising & promotions as well as other costs), working capital (receivables, payables, and inventory), fixed assets and capex (split into start-up investment and new maintenance capex), debt & equity financing as well as valuation assumptions (such as discount rates used in the weighted average cost of capital).

In the summary tab you can see a high-level report with the main metrics and value drivers of the model. It can be readily printed on one page for your convenience.

Calculations: this is where all calculations are performed. The revenues are calculated based on the service calls and store sales, pricing, and working hours assumptions, and deducting the operating costs adjusted for inflation from the operating profit results. Based on the assets financed and the gearing of the financing, interest, and depreciation are occurring. By using the working capital assumptions, the impact of the business cycle is presented. Finally, depending on the level of the investment considered, the relevant debt financing is calculated (Long term debt and overdraft).

In the Outputs tab: everything is aggregated here into the relevant statements: profit and loss, balance sheet, and cash flow.

Moving to the Valuation tab, a valuation is performed by using the free cash flows to the firm, and then a series of investment metrics are presented (Net Present Value, Internal Rate of Return, Profitability Index, Payback Period, Discounted Payback Period, Sensitivity Analysis).

In the Graphs tab: Various graphs present the business metrics, revenues, operating costs, and profitability. Then multiple charts present the working capital, debt & equity along with cash, assets, and cash flows, which results in a valuation on a project basis as well as on an equity basis, together with the feasibility metrics.

In the Break-Even tab, you can find a break-even analysis and see how many sales you need to break even.

Sample Plan: a sample short business plan wording is also provided, which you can use as a base for writing your own business plan.

Checks: A dedicated worksheet that makes sure that everything is working as it should!

Important Notice: Yellow indicates inputs and assumptions that the user can change, blue cells are used for called-up cells, and white cells with black characters indicate calculation cells.