How will you make money?

Don't worry; showing how the business makes money is much simpler than you think. For example, a solid financial model will answer the following questions:

1. How much does it cost to acquire a customer?

2. How much cash will you make from that customer, over the course of their life with you?

3. How do your costs break down, per unit and on a monthly basis?

According to Get Backed, the business slide of a pitch deck should include important aspects such as revenue, gross profit, earnings before interest, taxes, depreciation, and amortization (EBITDA), net income, burn rate, and cash flow. Equally as important is to contextualize your math (as in, "if we get 1 percent of the market, then we will have hit our revenue projection"). [1]

Pre-revenue companies may have the good fortune of making up assumptions and financials, but that is not an excuse for having unrealistic projections. Since the deck is designed to introduce the idea, it's not too important to show a full-blown financial model with every assumption, sensitivity, and margin analysis.

Demonstrate

• Consistency. Show a clear relationship between how costs and revenues grow over time.

• Financial literacy. You know how to think about the financials of a startup.

• Level-headedness. You are not overly optimistic about your projections or too cautious.

Answers

• Can you acquire customers for less than a third of their lifetime value?

• What is your monthly burn rate-how much money are you spending a month?

• Are the revenue projections reasonable?

• Are costs legitimate?

References

1. Get Backed, by Evan Baehr and Evan Loomis

Tags

• #get-backed (See: Get Backed)

• #index (See: #index)