Paid for version of the Quick IRR Model provides additional functionality and reports which are not available in a free version. The free version will have these disabled and marked with blue shaded background. You can also change certain non-structural variables and assumptions entered during on-line assembly stage as described below.

Please note that in Excel file of the Model fields marked with yellow background are data input fields. You can re-populate these with your own data without any risk of altering the structural layout of the Model.

Nevertheless, as it happens with financial and operating inputs, these have to be meaningful in the context of your business. For example, negative customer additions would not yield a sensible IRR result.

In this area of the Model you can change business assumptions related to your project. The Model will take care of the rest and will run your data through formulae and into the output reports and graphs.

An example of the Operating Assumptions’ box is provided below.

Full version:

Free Version (disabled options shown with blue background):

You can manipulate the following business data for your project (legends dependent on other inputs are shown in [square brackets]):

Input field

Comment

Start Date You can change your Model's Start Date. The timeline will re-calculate automatically.

Currency

It is a label field and you can insert any code or symbol

Corporate Tax Rate, %*

Default value is 0, inserting a tax assumption would result in recalculation of all performance indicators such as IRR to post-tax basis

Units

By default, the scale is in thousands, or 000s. Note that this input is a simple label. The Model does not self-adjust scales assumed by users.

New Customers Acquired per [Quarter], [000’s]

Sets the rate at which new customers are acquired during each forecast period.

Customer Retention Rate (1-Churn), %

This is a very important operational metric for any customer driven business. As customers are acquired, some of them never return (churn) and some become repeat customers (e.g. retained). The Rate is expressed in annual terms. For example if retention is 60% annually, then 10% of your customer base will churn every quarter and 90% will roll-over to be part of your active customer base going forward. 

Direct Margin per Customer, %

This input is an equivalent of Gross Profit margin that each customer delivers with each purchase. The ratio excludes pre-launch and launch costs as well as marketing and general overheads.

[Quarters] to Launch

Measured in periods of your choice this input sets the date for the project’s commercial launch.

Average Check per Customer, [USD]

This is the main revenue driver as it sets how much money each customer spends on your products or services in each forecast period. It is particularly useful if you have more than one source of revenue associated with each active customer (e.g. on-line shop, referrals or advertising)

Pre-launch Development Costs, [USD 000's]

The Model will evenly spread pre-launch business development costs for your project between the Model’s start date and up to the assumed launch date.

Launch costs, [USD 000's]

Launch costs are reserved for special one-off launch related expenses such as launch promotions and marketing campaign and which are not expected to continue on regular basis.

Regular Marketing per [Quarter], [USD 000's]

As the name suggest this is your regular marketing budget to maintain assumed rate of new customer acquisitions going forward.

Overhead per [Quarter],
[USD 000's]

Consulting per [Quarter],
[USD 000's]*

Outsourcing per [Quarter],
[USD 000's]*

Allows modelling various fixed type of expenses on period-by-period basis. You can re-label each class of expenses to suit your project’s specifics.

Inflation, % per annum

These are price indices, or inflation factors, for revenue and cost elements. You can differentiate cost inflation for each cost element, or have revenue and cost inflation run at different rates.

* denotes options which are not available in free version.

Valuation dashboard allows entering various assumptions related to funding and valuing your project. The picture below shows full version. Investor and Deal related parameters are disabled in Free version of the Model.

Full version:

Free Version (blue shaded areas denote disabled fields):

The dashboard is an analysis tool as the Model reacts to changing assumptions and instantly recalculates IRR, paybacks and other performance metrics. The description of the input and output fields are provided in the table below (square brackets denote part of the label dependent on currency and periods settings):
 

Input field

Comment

Exit Valuation Driver

If you wish your free report and/or paid for Model to measure IRR on going concern basis you can assign terminal (exit) value to your project driven by revenue, cash flows or customer metrics.

Exit Driver Value

Assigns value to your choice of Exit Valuation Driver. If you wish IRR measured on projected cash flow basis only (excluding any impact from Exit Value), you can set this variable equal to zero.

Breakeven in [Quarters]

Finds period when cash flow break-even is achieved based on Operating Assumptions’ inputs

Payback in [Quarters]

Calculates break-even period when the project turns cash flow positive on cumulative basis based on Operating Assumptions’ inputs

Total Funding Required, [USD 000’s]

Calculates total funding required until break-even is achieved based on Operating Assumptions’ inputs

Founders’ Capital Pre-Deal, [USD 000’s] *

In absence of an Investor Deal Founders’ capital required would equal to the total funding needs for the Project. If there is an investor deal, the cell would calculate capital required to cover cash burn up to the Investor Deal Date.

Investor Deal Date*

Allows investors to join in the project company at any assumed date during the forecast period of the Model

Co Valuation at Deal, [USD 000’s] *

Sets Company value for a deal with investor. This variable and the amount invested by investor would set % of the company sold to investor(s). Note this is a post-money value.

Investor Investment, [USD 000’s] *

This is an input field, e.g. not restricted to any value. However, logically the amount should correspond to funding required and Co’s Valuation at Deal. If there is no investor then the value in this field to zero.

Implied Share Sold, % Capitalisation*

Shows what % of the Company is being offered to investor(s) to bring in required amount of proceeds (Investments) at given Co Valuation on post-money basis.

Total Project Return, %

Measures IRR for the whole project, pre-tax or post tax as required (depends on the value assigned to corporate tax rate in the Operating Assumptions box to the left).

Founders’ Return, % *

Measures IRR for the project’s Founders. If there is no Investor Deal assumed, then Founders’ IRR would equal Total Project’s IRR.

Investor Return, % *

Measures IRR to Investor as a function of % the project sold to Investor (share of the project’s Cash Flows and its Exit Value) vs. the amount of Investments put into the Company at Investor Deal Date

Funding? Check Field *

Would turn red and show negative amounts if Investor Investment is not sufficient to bridge project’s cash flows to break-even. However, if there is a funding gap, the Model would not ‘break’ but returns to Founders and Investors would assume that any funding shortfall after the Deal Date would be covered pro rata to ownership on when needed basis.

 

* denotes functionality only available in full version of the model.

The Model's calculations area is located below the Operating Assumptions and Valuation Dashboard boxes. The end of the calculation area is marked with - 

  >> End of Sheet

Users are not required to alter any of the formulae in this area. However, there are no hidden lines or complicated formulae. If you feel comfortable with the data flow in these fields you can adjust the logic to better suit your project’s environment as you see fit. 

Please, do not forget to make a copy of your Model before making any changes to the code.