This book outlines smart business strategies for building a technology startup and provides a
comprehensive guide to building a financial model of the company. I wrote this book to share my
entrepreneuring experience and to help the entrepreneur avoid many of the obstacles and hazards
that I encountered while leading and participating in early-stage companies. This book is important
because it combines logical business thinking and strategies with a step-by-step methodology for
planning and modeling a technology company. It practically demonstrates the creation of operational
and financial models that describe the workings of the company in quantitative terms. This
book shows you how to take a business idea for a company and break it down into basic functional
and operational components that can be modeled. The resulting model describes the business in
quantitative terms and generates operational scenarios and financial projections that are needed to
assess the value of the proposed enterprise.

Who This Book Is For

The ideal reader of this book is the technology entrepreneur, the business or technology student,
the owner of an early-stage business, or anyone with an interest in the mechanics of planning,
organizing, and developing financial projections for business enterprises. This book is also for anyone
interested in using Microsoft Excel to develop operational and financial models of business
enterprises.

How This Book Is Structured

This book presents a structured and logical exploration and development of a business strategy
combined with the development of operational and financial models. The book takes you through
the progressive creation of operational models that reflect primary functions of the business leading
to the creation of financial models that develop standard financial statements.
The first three chapters of the book form an introduction to the remaining chapters, each of
which takes you through a step-by-step process of building the next logical model in a sequence
required to complete the entire company business model.
Chapter 1 begins with a high-level discussion of business principles and practical suggestions
for the entrepreneur and concludes with a discussion of concepts for developing financial models.
Chapter 2 describes, in greater detail, the structure and methodology and best practices for
building a financial model for a technology company.
Chapter 3 outlines the business case for Green Devil Control Systems (the Company), our business
case company and new-breed, green technology company. We will analyze and model the Company
throughout the remainder of this book.
Chapter 4 kicks off the planning process with the development of organizational concepts and
the forecasting of staffing and related costs.
Chapter 5 opens our examination of Company target market assumptions with the creation of a
sales and revenue forecast.
Chapter 6 develops the cost of goods sold for various product and service options of the Company
and, combined with the sales and revenue forecast developed in Chapter 5, provides for a forecast of
margin contribution from the sale of products and services.
Chapter 7 assesses the life cycle cost of the sales and marketing function, modeling the fixed
and variable costs associated with selling the Company’s products and services.
Chapter 8 plans for the application of the resources and schedule needed to develop, test,
manufacture, and distribute the Company’s products and services to market.
Chapter 9 budgets for capital expenditures and other operating expenditures that are associated
with the core operations of the Company, product development, and sales and marketing.
Chapter 10 is the first of our financial modeling chapters covering the concepts of profit and
loss and cash flow in detail and developing profit and loss financial reports.
Chapter 11 explores Company valuation and investment strategy utilizing the forecasts and
assumptions developed in previous chapters.
Chapter 12 rounds out and completes our financial discussion with the creation of a Company
Balance Sheet and the application of financial ratio analysis to our modeling results.

Prerequisites

The financial models and examples used in the book were developed using Microsoft Excel 2007.
This book is written for readers who are familiar with Microsoft Excel at an intermediate or advanced
level. The use of Microsoft Excel for financial modeling is emphasized rather than how to use Microsoft
Excel in a generic sense.