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0:00
Welcome back. I'm Ed Addison
from NC State University.
This is session
seven of Managing
New Product Launches,
and the topic of
this session is building
a financial model.
The reason to build a
financial model is to
understand how your product
will enter the
marketplace and perform.
But also it becomes
the basis for building
a business plan.
0:25
Before building a
financial model,
I highly suggest choosing
a financial modeling tool.
Most people who are working
in new products are
not accountants or
financial experts and
I don't recommend generating
financial statements
from scratch in Excel,
although if you
have an accountant
or a financial modeler,
you can do that with
your assistant.
There are tools on
the marketplace.
These were mentioned
the last time.
Again, it doesn't matter
which one you use
as long as it's
a tool that will generate
financial statements from
business assumptions.
The whole idea is to
enter the assumptions of
your business to see how it
will perform financially.
1:07
Before beginning the
financial model,
it's important to divide
your business into phases.
This is along a timeline.
For example, if you're
launching a new product,
you may have a period where
you do product development
and test before you even
enter the marketplace.
Then you may have another period
where you do product launch.
Here you're entering
the marketplace,
but your sales aren't
really growing
yet because you're just
getting the word out.
Finally, then there's
the growth phase.
This is after the product is
in the marketplace
and people have
largely heard about it, and
we're looking at
year-over-year growth.
Each of these are
different phases of
your business and if you're
building a financial model,
they almost need to be modeled
separately but that link up
against each other at
specific points in time that
you determine are relevant.
