I've worked on a lot of models and templates that contained cash flow waterfalls with multiple IRR hurdles, single IRR hurdles, multiple preferred return hurdles with simple interest, single hurdle preferred returns and everything you can think of in-between. There are some commonalities between good waterfalls as far as how you should lay out the formatting so that it is easy for investors to understand as well as anyone that needs to view them.
What Makes a Good Multi-Family Underwriting Template
When we are talking about underwriting in this context, it means evaluating and assessing the risk of investing in a a multi-family real estate deal. The main thing investors looks for when using these kinds of templates is if the deal can produce sufficient returns given the required investment and assumptions about future operating cash flow as well as at what occupancy levels and/or debt service levels does the deal not make sense anymore. Not making sense means negative operating cash flows and/or negative cash flows after debt service.
10 Equipment Rental Business Model Strategies
The equipment rental space is vast and all sorts of business models have been built around the idea of making money be renting out equipment. The main thing owners and operators (and investors in these businesses) want to know is if the investment is worth the risk (WACC). They are cash flow businesses (buy equipment, rent it out for cash flow over time) and possibly sell the equipment at some future date.
Financial Model Template Beginner's Guide
I've been building financial models for clients regularly since 2016. This includes small businesses and businesses with 100s of millions in revenue. What makes a good template depends on several factors and nearly every case is a little bit different. I'll go over all the factors I consider when building something new.
Real Estate Trends Over the Next 20 Years
It is currently mid 2023 and I am looking at some of the potential big trends to come in the real estate industry. Real estate is where you get rich slowly and often it takes patience with long-term goals / mindset. To drive those goals, it is important to have some macro-level ideas about what is going on in the space and where things could be headed.
SaaS Spreadsheet for Management vs SaaS Financial Projection Model
I've worked with all sorts of owners, operators and executives in the SaaS space. One thing that is interesting is what management uses to help make decisions in terms of spreadsheets vs. what is used to raise money from investors in the form of a three or five year SaaS financial model. They are both used to some degree, but day-to-day management requires simplicity and functionality that is not so rigid or formal.
Economic Limitations of Blockchain and Cryptographic Token Ecosystems
Are there any current logical flaws in the macro economics of the current state of cryptographic tokens, blockchain, and cryptocurrency in general? Well, there may be so let's dive in.
Limitations of WACC Methodology
The WACC (weighted average cost of capital) is a methodology commonly used to come up with a discount rate for the future cash flows of some project or business. The rate is telling the analyst what it cost to finance a companies operations based on the cost of equity (measured as a rate) and the cost of debt (measured as a rate). The cost of debt part is pretty straight forward but the cost of equity is where things can get messy.
Sustainable Investing by Large Companies
Larger companies are increasingly recognizing the importance of sustainable project investing as part of their corporate strategies. They are integrating environmental, social, and governance (ESG) factors into their decision-making processes to mitigate risks, enhance their reputation, and create long-term value. STWD (Starwood Property Trust REIT) recently announced they were jumping into this (June 2023) by raising north of $350M to finance various projects that were considered 'sustainable'.
What Open Source Means and How it Can be Monetized
Open source refers to a type of software or product that is released under a license that grants users the freedom to use, modify, and distribute the source code. It promotes collaboration and transparency, allowing anyone to view, modify, and contribute to the codebase. You will often see for-profit companies that are partially open source, meaning they will release certain projects that are licensed with usage restrictions and are proprietary in nature (such as OpenAi's GPT-3 and GPT-4 language models.
General Contractor Risk Management Strategies
Running a construction business / being a general contractor involves risks from many angles. There are some best practices that can be undertaken to try and reduce some of these risks and thereby maximize the chances for long term success.
Financial Modeling for Scaling Up Multiple Physical Locations
I've done a bunch of financial models for clients that need to understand the monthly cash flow effects of opening physical locations over time. There are a few different approaches to this, which I'll discuss below. Most of the industry-specific models I have are for bottom-up assumptions of a single location and planning all the economics of that, but I also have a few broad-based models that can plan 12 to 25 locations. For clients, I've done them for arbitrarily large scaling plans.
What Makes a Successful Car Salesman
A good car salesman is worth his weight in gold. There are some things that can be taught and some things that come naturally. Let's take a look at some key characteristics and ways to become better at selling cars.
Payroll Best Practices for SMBs
Most small and medium-sized businesses must deal with payroll reporting and tracking. It can have internal and external reporting requirements and often times you have to enter data for payroll into a system (like ADP / Paycom) as well as make entries for the financial statements. Let's go through some best practices for this department.
CAPM Calculation Helper
CAPM stands for capital asset pricing model. It is referring to the methodology used to come up with a rate of return you should expect from a project or business (usually used for specific projects) when taking into account general market data or industry-specific data that the project or business is a part of.
WACC Calculator Spreadsheet with Formulas
Nearly every single financial model here on this site has a DCF Analysis schedule built into it. Each one requires an input for a discount rate. How do you know what discount rate makes sense? Well, using the WACC (weighted average cost of capital) methodology is a common approach. This template walks you through all the calculations required to come up with the WACC, which you can then take and plug into your DCF Analysis.
How to Come Up with a Discount Rate when Financial Modeling
The discount rate is the main input of a discounted cash flow analysis. I put that in nearly every single financial model you see on the site as well as have standalone templates just for performing DCF analysis work. What people always ask is how to come up with the right discount rate to enter in to the model. Let's dive in.
Update to Preferred Equity Financial Model - Non-compounding of Unpaid Preferred Return
This is one of the most popular joint venture cash flow waterfall distribution templates I've built. After getting about five requests from different customers for this update, I have decided to integrate it to the main template version. See more below.
REIT Investment vs Direct Real Estate Property Investment
Comparing the average returns between investing in REITs and direct real estate investment over the long haul can be challenging due to various factors, including market conditions, location, property type, and individual investment strategies. Here are some general insights on the historical performance of these investment approaches.
What Types of Manufacturing Businesses Benefit the Most from Performing What-if Analysis?
There are numerous types of manufacturing businesses, as manufacturing encompasses a wide range of industries and products. Managing them can also involve different approaches. Several types of manufacturing businesses can benefit from performing what-if analysis. Here are a few examples:
Made to Order Manufacturing: 10 Year Financial Model
This financial model has a robust set of assumptions that are designed to meet the needs of made to order manufacturing businesses who need to perform financial forecasting. The model drives off counts of units ordered and cash collections between the order month and shipment month. I made the assumptions robust enough that it could really be used for any manufacturing business. You can shift customer payments to be received after the shipment month by simply changing the month number in that schedule and assume the 'units ordered' count is the 'produced units' count.
A Review of Airbnb Industry and Some Strategies for Airbnb Hosts
We are looking at some general Airbnb stats and a few strategies that hosts often employ in their short-term rental businesses. Note that specific statistics may change over time, and strategies can vary depending on the location and individual circumstances. It's always a good idea to conduct further research and consult with local experts for the most up-to-date information and tailored advice.
Strategies to Manage Inventory at Multiple Locations
Managing inventory at multiple locations can be a complex task, but with the right strategies in place, you can ensure efficient inventory management across all your locations.
Calculating the Profitability of Airbnb Homes
The price for an Airbnb home can vary widely depending on various factors such as location, size, amenities, and demand. This is your most important starting point when reaching profitable and sustainable operations. You can have a great home for a bad price and a not-so-nice home for a great price. You have to think about all aspects of the deal. Lets take a look at all the considerations for how to calculate profitability of Airbnb homes.
Lending Activity, Inflation, and the Fed
Lending can have an impact on inflation, although it is important to note that its influence is not direct and can vary depending on the overall economic conditions.
Why FIFO Accounting Methodology is So Hard to Automate with Excel and Google Sheets
Note, it took me a few years of attempts, but I was able to build a FIFO cost of goods sold calculator in Excel and Google Sheets. It was not easy and I'm going to explain why spreadsheet software's have such a hard time with this calculation.
What Makes or Breaks a Manufacturing Business?
The most important thing that can make or break a manufacturing business is its ability to consistently deliver high-quality products to customers on time. The longer it takes to deliver products, the less satisfied customers are and the less they are likely to purchase in the future. Also, if the products are not made with consistent quality, customers will leave and distributors will stop selling what you are manufacturing.
Types of Businesses that Utilize Volume Discount Pricing
A service-based business (auto repair), a luxury brand, the hospitality industry, and the vending machine business all would not care about volume pricing. So, what businesses do care about this and implement strategies to maximize profits by optimizing pricing to incentive bulk purchases?
Maximizing Laundromat Profitability
One of my favorite financial forecasting models that I've built was for a laundromat. It does a great job at letting the user plug in virtually any potential startup or acquisition scenario and see what the resulting cash flows look like over time as well as the return on investment. That template is really good at planning, but what is also important is strategies and tricks to maximize profits. That is what the focus is here today.
Sales Tracker: 12 Month Budget vs Actual
I don't do these that often, but here is a free template that was built in Google Sheets. It is not very complex, but I do believe it is effective and really simple to use.
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