Ecommerce business plan fundraising financial model for physical inventory

Fast forward many years and I’ve learnt a thing or two. I’ve raised for myself and many others. For my startups and for other’s I’ve done fundraising for, I’ve built a number of models. They were all solid, but they weren’t mind-blowing (in my opinion). A founder reached out to me for an eCommerce model when I was studying data science by the beautiful beaches in Bali and I thought, screw it. Let’s make something cool.

Over the course of a month, I pulled all the cool stuff I had coded before, analysed the models I have, studied the pros and I built this model. Figuring out how to do some of the calculations was almost enough to make me quit… Founders seemed to like this model, so I built others such as for SaaS. I took the learnings and improvements from those models and fed them back into here.

Whether you’re raising for your eCommerce startup, or needing to develop an operational plan to understand how you are going to grow and not run out of cash, you need an excel model. The problem is that they’re really hard to build. You don’t have time to spend 2 months building one, you need to be executing like I wish I had. Sure, maybe you have an expensive, smart CFO, but they’re still running your company, and the RoI on their time to replicate what I am doing is ignorant. For the cost of a an hour of their time (or mine), you skip months of development and get straight into inputing your actuals and forecasts. This is a no brainer.

Resent buying a model, and feel better paying someone to build a model for you? Sure, paying someone smart to build something sort of usable can cost $10k+. You won’t even get what you want. I’ve seen the models ex-bankers build. They don’t get startup. They think like bankers.

Want to find a free one? Sure. I found around 5 others which weren’t bad, but just really limited in terms of functionality. These don’t solve the problem of just having something which just works and gets you back to building your GMV (Which actually matters).

This is the model I wish existed. I literally built it for you. I only build new things which add value to founders, not copy others.

We’ve drawn on our years of experience operating startups at early and growth stage to create something that just works. There is not a needless level of detail, nor a sparsity of assumptions to illustrate a depth of logic and insight. Everything included has been considered as to whether it adds value and if investors will “want to know and ask.” The structure also enables founders to change the model to fit the exact needs of their startup (particularly in revenue forecasting).

This model is for all ecommerce companies that have a non-subscription business model. The model forecasts for a three year period on a monthly basis.

• Right timeline: 36 months of monthly forecasting with 3 annual summaries
• Flexible for actuals and forecasts: Actual and forecasts with sheets which combine your numbers in P&Ls to the exact month magically
• Staff: Manual and automated forecasting of staff. For most staff you can decide the month your staff will join (Such as developers or a CFO) and the month they are terminated. Furthermore you can set a date and salary increase (such as post-series-A) and salaries will increase on that date, and adjusted for bonus and payroll taxes and benefits. For support, recruitment and channel sales staff, your staff requirement flexes as you scale automagically to your desired assumptions
• Expenses: Granular assumptions to rapidly forecast your G&A, S&M, R&D and CAPEX. Logistics, photography, delivery and payment requirements as well as analysis of your unit economics are done in their own seperate sheet
• Cohort approach to forecasting: Get a cohort based forecasting model without the work. Input a few assumptions and you can see the revenue, costs, orders and units from each monthly cohort, for both first and repeat orders
• SKU breakdown: Rapidly forecast new and repeat revenue and costs for both consignment and outright stock by making assumptions for your SKU categories
• Comprehensive marketing plan: Forecast your entire marketing plan across paid, organic, email, blog and social media channels with no heavy lifting. All the relationships between the channels are deeply integrated so social rebroadcasts will result in newsletter sign-ups
• Detailed KPIs: Full dashboard of all your KPIs
• Charts: Breadth of beautiful charts to graphically explain your business
• Full blown P&L: Detailed, logical P&L explaining your business model step by step in the secret style some of the fastest growing internet companies in the world use, that is now available to you!
• Summary P&L: Easily copy and paste your summary P&L into your pitch deck
• Sources and uses: Get insight into your fundraise requirements. Four beautiful charts to copy paste into your pitch deck

• Fully integrated and automated model: Get insights from KPIs if your assumptions make sense, so you look like a pro with a plan
• Standardised structure on each sheet: Every monthly calculation in the ecommerce financial model starts in the same column which makes it easy to audit
• Consistent: Consistently colour coded cells for formulas, links and assumptions applying best practice from global, top-tier investment banks. All cells are perfectly aligned
• Comments: Comments on all assumptions so you know what to input and why
• No hard coding: No hard coded numbers in any formulas
• Open editing: Model is not locked, you are free to restructure as much as you like!
• Clear linking: Links to each sheet are always at the top of each sheet to track and understand where assumptions come from and what sheets are driving another one
• Separate actuals and forecasts in your P&L: Easily update your model monthly during your fundraise without fuss. Combine months by simply adding a date of your choice
• Dynamic year end: Set your year end at a month of your choosing. All annual adjustments are made automatically with powerful formulas
• Accounting: Cash and revenue accounting
• Forecast period: 36 months of forecasting with 12 month summaries for each forecast year
• Change assumptions every month: Make the ecommerce financial model assumptions as simple or complicated as you like. Every assumption is mapped out on it’s own row. For example, any month you want to increase your pricing for consignment repeat purchasing, simply change that month. If you want to keep your assumptions linear, the formulas support that decision automatically and by standard. Most growth assumptions also come with ‘optimisation’ rows

The ideal user:

• Building a physical ecommerce or retail startup (This is not a subscription model)
• Is comfortable with numbers and wants to have control over their model with fairly granular assumptions
• Is at inception to around series-A stage of fundraising
• Likes to impress and enjoys a beautiful model
• Wants to show investors they applied a very vigorous, logical approach to their forecasting and operations
• Wants a model that runs rings around hotshot bankers without the crazy cost
• Needs a logical, consistent model they can use customize for their own purposes (Ideal)

• If you don’t know how to use a (SUM) function you may find it overwhelming if you need to understand every detail. Every line has been broken up to be logical to understand, so with a little diligence anyone can be a total boss.
• If you don’t understand how marketing works (such as what CTR is), then this model may have too much detail for you to handle.

• There are a number of additions which could have been added to this model and have purposefully not included. If you have seen models with other frills, trust there are reasons why they have not been included. Let’s go through some of these so you understand:
  • Traditional cash flow statement and balance sheet: There is a cash based accounting section to understand your actual cash burn. Investors don’t really care about your BS and CFS sheets like a PE company would. They care about the logic of your model to show it is thoughtful. They care how much revenue you will generate to size the market opportunity (how they will get rich) and how ambitious you are. The BS and CFS are useful at growth stage companies when there is a line of sight on meaningful forecasts- early stage you don’t really have many reliable numbers so they serve to create information overload
  • Detailed inventory forecasting and logistics: The VCs are investing in you and the potential. The timing of shipments from China and what you model as how many units fit in a container don’t matter. Yes, you need to include the high-level costs, but you don’t need to have this level of detail in your model. It should be taken for granted you know how to execute. We forecast your inventory through inventory days, which is a nice simple way of doing it
  • GAAP and IFRS accounting: This model is based off an approach used by high-growth ecommerce companies like Rocket Internet which is more insightful for these purposes. You can share your accounts in IFRS if you have ‘actuals,’ but your forecasts don’t need to adhere to these accounting standards. Generally though, all the principles of accounting are applied as feasible
  • Cap table: It is best to have this separately so it is a distinct conversation rather than bundling it with your forecasts
  • DCF and valuation: Having a DCF at early stage is totally ridiculous, particularly as the assumptions don’t make sense (What’s your discount rate? Show me how to do your WACC…). A DCF is also not how VCs value early stage companies. Including a DCF or multiples is not how you want to approach a valuation discussion with investors and I think can actually harm you in negotiations. I recommend not putting a valuation in the model
  • Marketplace distribution: The model assumes you sell on your site and not principally on Amazon. It’s key to build a brand to create a business and have strong margins. You can add a line to make deductions for marketplace fees if you need to
  • Complicated paid marketing assumptions: We want to show logic not needless complexity. There is some very smart logic in calculations for emails and the like, but we try keep the number of assumptions down so you can discuss what’s important (Like CPC and budget, not keyword volumes)
  • Growth modelling: If you are at growth stage, you will have a lot more visibility on your actuals and have more historic reporting. This is not the best approach to modelling and fundraising for you. But the cool thing is, if you know basic excel, it’s easy to add columns for your actuals if you like

• Startup is hard and fundraising is a total nightmare. It takes up so much time and it can be far easier to execute if you have the right tools to hand.
• When we started Delivery Hero I spent far too much time figuring out how to build a good fundraising and operation model and it was infuriating. I wished I had something that just worked, or a base I could use to fiddle with and get the result I wanted (Meaning, getting back to executing). We’re making these models so you don’t have the same painful, long nights and weeks, not executing like I wished I could have.

• The model is provided as is
• Every effort has been made to ensure there are no errors. Given the size and impressive depth it is impossible to ensure there are none. If you find an error, please reach out so it can be fixed for everyone! We are happy to help you fix any errors free of charge
• If you need support building your model we offer a consulting service dependent on your bespoke needs

• You need Excel. Google Sheets is never to be used for a fundraising model as the functionality is limited. It might work in Sheets, but I can’t warrant it will work. I highly recommend using a PC and Excel
• This works on both Mac and PC and was built on both (But Mac sucks)
• You should install the ‘Solver Add-in’ and ‘Analysis TookPak’ if you do not have it installed already. These are free and standard Microsoft add-ins. I don’t require it, but it’s worth having
• We do not have circular references so there is no need for ‘iterations’ in this model, but in case, turn them on in your calculation settings, especially if you fiddle.
• This is not needed, but if you want to be a boss in Excel, download http://www.asap-utilities.com/. There are some really useful tools if you need to build models. It only works on PC though (as do the other cool tools).