 Hello everyone! Good morning, good afternoon, good evening, irrespective of where you are connecting from. Thank you to my wonderful host, right, Moussindar, that's so, so, so smooth, right? I love that. So thank you. Thank you. With always too much of our time, right, I see once again a very big welcome to everyone of us and welcome to our webinar, which we usually have every Thursday of every month. Okay, so what are the things we'll be doing today? So we just go straight to the point without wasting much of our time. Understanding how business generates revenue, irrespective of what you do, irrespective of the business or businesses that you do, definitely revenue is key, revenue is key, right? Yes, business is all about you generating income, right? You generate that income, you need to manage your costs efficiently so that you have that good profitability standard. It's not all about profit. The finance guys are always more concerned about the cash, those free cash that comes from the business because everything is all about money, money, money, so that cash element is very important. So you understanding how business generates revenue? Because revenue is actually the umbrella of every business. Give it or take it. Even an NGO of establishment also need income, right? So revenue is like the umbrella because if anything eats, that's your revenue. The business is gone. Everyone is eating from the revenue and component of revenue, we kind of tie that into what we call drivers in business and financial modeling. Financial modeling as the whole is all about driver. What is driving this line item? What is driving this line item? We want to focus on this. What can I use as a biz, right? So then we come with our games, prizes and demo. So let's take a look at it. As I said, you understanding how business generates revenue is very important. Someone give you a job, a task to do that. Please, can you build a model for me? The first thing you ask, how will you be generating revenue? What are the strategy around it in generating revenue? I think tech is more like, but having his own stand now, right? As my colleague mentioned, and it's really taking over and there's one power in what is making them gain grand and having that value, having that huge valuation, right? So those are the things we'll take a look at today. So when you hear anything like components, right? I'm quite sure of some people that have listened to my presentation. We always understand how I try to explain things. Components, anytime you hear anything like components, it's just saying what are the one or two things that we just need to put together before we call this thing Disney. So if I ask you what are the components of a car, definitely you're telling me, you must have your four tires, right? I know we have three with tires, we have two, right? But okay, we have four, you have your windscreen, right? You have your bonnet, you have your engine, you have the seats, right? Those things must be put together before you call it that name. Now let's relate that to we say component of revenue irrespective of the industry. I mentioned, I'll repeat that, irrespective of the industry, irrespective of the business canvas or your business model that you operate, you must always have price and quantity. Take it or leave it. For a manufacturing fan, you are saying, oh, how much are you selling this to your product? Are you selling plakaton? Are you selling per unit? Are you selling in pieces? Then the quantity, total quantity, total unit that will be sold or that will be sold at this particular period and you multiply by each other and it gives you the revenue. You go to the telecommunication industry, they're saying, oh, what is our price? What is our quantity? Definitely price average revenue per users and the quantity is the total subscriber that we have multiplied. It gives you the revenue. You go to oil and gas and say, oh, what is the price per barrier or how you decide to measure it? Then you multiply by the total production. You go to banks. You're asking, oh, banks, how do you generate revenue? Because those are the things that you need to understand. So for banks to generate revenue, focusing on their core business operation, definitely, oh, what's the total loan that they've given out, which comes with quantity, right? Total loan that has been given out and what is the yield that was charged? But like what's the interest that was charged on each of the respective loans? And that will give you their revenue. So as a modeler, first thing you need to understand, how is this business generating revenue? Right? And that's more like what is what really drives the business. Understanding how business generates revenue, they said, and that kind of tie into how you approach building a model. When people really get stuck, when it comes to less viewed industry based model, right? I have a colleague of mine that was relieved of his duty a while ago, spinning modeler for the past four years. Then he's going to, they just went to another company, industry, right? They gave him, can you be the model for us, which is a bank? And he got stuck. It was funny, right? It's not that he does not know it because he actually did not have that knowledge of this basic thing. So kinds of model. And how do we approach that? As I said, ask, how is this business generating revenue? And that will guide you into you knowing where to start the model build from. Most businesses or most business or businesses, they are more of profit or loss driven, which means the line item that drives the old business operation can be found in their profit or loss accounts. So you see that cost of sales, let's say for a manufacturing company, cost of sales, that's where you see their open stock, their raw material purchases, their inventory, the unit suit. So which means the more unit they sell, the more revenue they can generate. So which more, like we call it top line item. So that revenue and cost of sale is what really drives the old business, right? And there was this school of thought that I said, yes, measure, when we do our ratio calculation, we measure everything against revenue. But we should always remember that cost of sale more like unavoidable expenses that we must incur before we generate that revenue. So if we have our gross profit, we should be able to also measure everything against gross profit. So management accounting, we call it contribution because that's what is left for everyone to eat from. So which means most businesses are profit or loss driven. And the other one is balance sheet driven. So most financial institutions are balance sheet driven. For example, a bank, how do they generate money? Let's look at the true map of it. You take your money, you take it to the bank as savings comes under their liabilities, right? Which means to start the build for that kind of business, you need to start from what's the liabilities. How many customer we deposit at this particular period? One, right? What is the average deposit per each of these customer? Then you multiply that, it gives you what you have as deposits and savings in their liabilities. Then they now convert that savings, they convert it to assets which becomes the loan and advances that they now give out. On which they now charge that yeet or some quality interest rate to now go back to their profit or loss account, which means most of their line item in profit or loss account, they depend on what they depend on balance sheet. So which means to build a model for a bank, you build up the balance sheet first. You don't start from profit or loss account cost, interest income, interest expense, impairments, right? Which other, which other those fees income, fees expense, they rely on those two guys, right? And you have some investment security that they also do. So you, you as a model, those are the things that you first need to understand before you jump into building a model. Because you want to build a model for your bank, if you are starting from profit or loss account automatically, you are off. Though there are some companies that they are more like in between and a little bit balanced, right? But that will be a discussion for another, for another day. Now, as I said, what is all about drivers want to focus this thing, you're asking what are the things that can drive this. So let's say for example, I want to focus my revenue and I'm asking what are the components of this my revenue, what must I have before I can get this guy called revenue. So you can have your price, right, quantity and above all capacity is one thing. If you have a platform that can only take 1000 subscriber, then it does not make sense when you are forecasting that we generate revenue from 1500 subscriber without making provisions to expand your capacity demand, right? This is one like, you know, taking it a step further into the economy, right? If the purchasing power is high, then they tend to sell more, right? Grotes for startup is only easy to break things down into price quantity. But when it comes to mature company, right, might be difficult to break things down. So such we use what we call goods. Now competition is one, if your business is so, so good, right? If it's so, so good, then expect competition, right? Because they would also come into play. So those are the things. So you want to forecast your cost of sales as a set revenues like the umbrella of every business. If there's a case where you really cannot break things down, you can set cost of goods to as a percent of our revenue, right? If you can break things down or the cost by this unit, how many units, right? Factoring the inflation, which kind of take care time value of money. Go straight to the next one, our selling general admin excesses, which we also call our operating costs. As I said, almost every line item can be set as a driver to your revenue, right? Now remember that revenue must be more like the key driver of the business, right? So if you can break everything down into each cost, monthly cost or salary, you can also do that. Inflation, time value of money, the competition and you wanting to expand, definitely if you're expanding, you then also have to do what to incur some operating expenses. Now depreciation, so these are more like the line item that you can have in a profit or loss account. Depreciation, you know, if the company does not have assets, definitely there's nothing you are depreciating, right? Fixed assets, what is the depreciation rate or what is the asset life span? For the net finance costs, right? Are they making use of loan financing? Do they have overdraft? What is the rate on it, right? What is the cash investment? Are they investing some of their then for the tax we are saying is their profit before tax and what is the tax rate, right? Keeping everything, everything being equal. So let's go straight to our demo and what I want us to do today is this. Are we as much as possible to be very, very detailed and if need be for us to have the part two of this. So I'm going to start with the black excel, black excel, right? I could have decided to start with a module, but I decide to keep things simple. Let's keep this simple. Let's keep this simple, right? So let me just create a sample. Let me create a sample templates, right? So when I did in my module, I don't usually like seeing this this line. I don't know why. I always like it to show like our white paper, right? So let me keep this, alright? Let me just keep this. So let me just create a sample, just a sample, a simple template so that we can build everything from scratch and we carry everyone along. So let me say what's the name of our company. Let me call this the brand, the brand tech limited. Nobody is using that name. Just, just a generic name. Anyone want to suggest a better name for us? So let me put it in this color, right? So what do we do? Let's say, what do we do? What do we do? Anyone? Anyone? So loan offering. So they don't usually call it loan offering. Let's say we are offering cash support, right? Cash support. Cash support to individual. You know this kind of right word that you need to use when you think about business strategy. So I think this is fine. So let me put this as the brand. So cash support. Is it to individual? Okay. Cash support to individual, right? I'm just trying to create something. So let me call this description. I put this as my description. Let me make this my unit. And here I can have some of my inputs come here, right? And let me say I can have my road to Tahir as well. So let me reduce this guy a little bit. So let's say our period. So let me just type, let's say 31st December 2021. So let's, let's just, yes. Don't worry about it. So let me just do this plus one, right? We'll put this into date. Then here, I really don't want to add code. Well, okay. So let's just keep things constant, right? Right. Forgive me. So our standard is saying we should never add code in a formula. But month, let's put this as 12, right? So minus one so that I can give us the end date. I think this, this can still be forgiven if you type 12 like this. 12 will always be 12. All right. Unless you want to convert the model to maybe really also to quarterly. Okay. I hope the date is correct. First to December, first to December. Okay, great. Then let's extract the year. So let me use my year function in Excel. And let me, so I would like to make this appear like this of financial F and F. Yes. So don't worry. All right. So let me put this as period count this plus one. Like I have this, right? So let me keep this constant. So if I scroll down, down, down, down, this is a student, right? I'm not a friend of multiple colors. Right. Let's, let's, let's just, let's, let's, let's design this a little bit. Okay. I think this is, this is good. This is just a sample template. Just a sample template. It's just a sample template. Okay. So let me now duplicate this. Let me duplicate it. That worksheets. Please, in case I'm doing something and yeah, I'm very fast. Don't mind me. I don't know where I'm always this fast, right? Because we can always ask questions and I can refresh back. So let me call this my input. Right. Let me call this my calculation. So let me call this my calculations. And I'll call this my, what? Let me call this my outputs. So outputs, component of our model. Basically, we need our inputs, your calculation, and our outputs. Right. So, so let's work with that approach. So here, let me put this. Right. So, so let me call this assumptions. So it can always be creative when you are building your own template. It's not massive views. They kind of follow this. Right. You're allowed, you can be very, very flexible. So let me call this calculations. Let me call this our, so let me just copy this time. Right. Let me call this our output. So I always encourage, anytime you want to build any module, as long as good it starts afresh. Yes. Yes. I'm not a template modeler. I prefer to create my stuff. Right. So from onset to now, let's first, let's assume a business case now. Right. Let us say we want to, so we want to create our revenue components. So let me call this our revenue, new components. So under my inputs, let me put this at this time. Right. Well, before we do that, this is my calculations. So I want this my calculation to be monthly. Right. And not yearly. It's always good whenever you are building a module for a startup to always make it a monthly module. It's kind of telling you all the story about that. So this, instead of having this 12, I'll just make it a one month. So it's one month period. Right. So I actually need 60. It was five. Yes. Multiply by six. Okay. Five years multiply by 12. They don't mind. This maths everything. So I need this. So I've just come equal to last period plus one. Remember, this is a calculation work. It must not have any input. Then let me just try and count 60 period, 60 period, 60 period. So I need like 60 period, 60 months. Okay. Let me just copy that. Okay. Now I have this. Then I cannot go ahead. Left to right consistency, which is what our financial modeling standard is saying. Dude only for period one. Right. I just copy everything. So I'll just copy this up to the 60 months. Let me open up everything. Right. So December 31st, 2026. That's the same thing we have in our yearly one. Okay. All right. So do it. I can always consolidate this into yearly model. Right. So what I'm going to do now is I will now close this my Excel. Okay. So by the time I put a formula in year one, I can always drag it for the 60 years. Even if I have 10,000 years, the standard is saying left to right consistency. Do this in period one. Then copy it to the right. So let me just do this and let me close it. We can right click. Right. And click on this hide or use the shortcut about that. That's, that's, that's, we can always learn about that. So that's what we have for our calculations. Now, let's think about our assumptions. The set is a fintech and what they want to be doing is they want to be giving out. So, so, so, so let's first understand how the business work costs as a modular. You really need to understand what this business is all about. So let's assume what we want to be doing now is want to be giving loan to individuals. Right. And the way we are going to approach it is this. Everything being equal, as I said, you can be flexible and the team does for the purpose of this model. So we will try and restrict it to some certain things. Let's assume we want to be giving loan out to people and our source of loan would be so the platform will actually be taking care of two things. You can actually save on the platform. Right. And you can also borrow money from the platform. So keeping it's everything being equal. We, our total loans that we can give out will be dependent or we depend on our savings. So which means if we have like 100 million savings from people, our platform, that means we can give out loan up to that 100 million. But the next thing you need to ask is this. We need to make provision for people that might want to withdraw on the platform. So which means we really cannot give out the whole 100 million out as a loan. We need to make provision for some. Right. So let's take it. Let's start. So let me call this our savings assumptions. Right. Let's call this our savings assumptions. Our savings assumption. We can call it savings imputes. Our savings imputes or savings drivers. Our savings imputes. And let's first start. Before we even go here, we are missing out something which is more like the main driver of the business. Users, some call it a customer. Right. It always, it always, it always users or customers. Right. So this one, let's call this our users. This imputes or maybe users drivers or so. So first thing we need to understand is this. We need our base users. Right. So there's something we call base users and there's something we now call active users. These tools, they are very, very important. Right. Most time is not about the number. Yes. You can have like one million users on your platform. What if maybe just 5% are actually making just 5% are actually active. Right. Which means the business actually generating revenue from them. So let's start. So let's say our base users. Let's assume for the base period, we can, so let me put that here. So I think this should be number. Right. This should be accounts. Let me just use this as number. So remember, we created a unit column here. Your module must have all these have this unit column. And here, I'm just put this as imputes. So let's say, okay, no, the addition of the imputes. Let me make this just one unique front. Okay. This is fine. So let's say they can start with, let's say just 500, 500. Right. Then how will this grow? How will this grow? So let's have a monthly user monthly base user growth. How do we expect this to grow month on month for respective periods? So I'll need to put that in imputes. Our financial money standard is saying whenever you are building your model, the model must always have a very clean and clear a description of what's each values in your model represents. Right. So someone would know that, okay, anything I see in this format, your list have it in impute because I was in hurry normally supposed to create that menu guide, right? Star guide that kind of give description. Anything you see in this format means impute. Anything you see is linked from another seller and all those things. So let's say monthly base groups. So let's say for year one, throughout the month, let's say they can have, let's increase our user base. Maybe we can say with 5%. Following period, let's say with 12.5%. Then the other period, let's say 10%. Because when you get to a level, when a business gets to a certain level of operation, their growth seems to slow down. That does not mean the revenue is decreasing, right? The truth is there's no business that actually grow on a straight line growth percent. I'm not saying yes, revenue can be decreasing, but the percent difference is not always as high as that. So this, let's make this 5% and for the last period, 2.5%. Right. So let's even calculate this. So we will be taking it one after the other. Let me go to my calculations and let me call this our users, our base users. So base users, let me just call this calculation. So I always try to maintain that two endings. Let's just make your model navigation easy. Yes, there's nothing special about this. So base users enter, right? Copy. We have that as our base period. So this is actually linked from a cell. Let's keep that in mind. Working with that in the way of building your model. Now I need our monthly growth. I need our monthly growth. And now look at this. We have our imputes as yearly. So we are saying for this period 2020, 5% throughout the year, 12% and for the respective period. And now we want to build our calculations. We want to build that monthly. So which means we need to be able to pick this percent and bring it here for the respective period. And the formula to use, I think I would like to use our lookup formula, right? Lookup formula. And what that would do is to look for this period, current year that we have in this, our monthly calculation, look for it in this period of assumption and return this value for each respective period. So let's do that. I think lookups work. So let's try lookup first. Try lookup. Lookup value. We are looking for this 2022, which I'm going to log the row. So in case I want to use the formula, I can use it. Then look for it in this, our year period that we have in this imputes. I'm going to keep constant. Okay. Think I've missed that. So let me do that again. Equal to lookup. Look for this period, which I'm going to keep the what? The row constant, comma, then go to my imputes under the year date that I have here. Look for the date for the year and what are we resulting? So the result vector, I'm going to keep the column constant so that I can always make use of this formula for another cell. So let me put this into percent. I can just drag it to the right so you can see for year 2022, right? Everything will grow by average of 5%. You can also have your input structure such that maybe June, from June to March, this will be your growth. So that's more like you factor in seasonality. So you are saying January, people tend to save less and all those kind of things. You can also factor it, but that's discussion for another day. So let's keep this straight. So which means for our base user, I will now be equal to the base period multiplied by one plus this respective monthly percent. So this is a user, so we should now have points and copy that to the right. All right. Now let's create our base user schedule. Our base user schedule, right? So we're going to have our beginning users add new base users, base users that we acquired. Then we'll, okay, we are not so the churn one, let's put that under active users. So let's have our ending base users, new base users, right? So this should also be in number because it counts. It's to the right. So this can set this just as a total format. So beginning, so for our base, that will be this 500 that we expect. And the same thing will now be our beginning balance will always be the closing balance for previous year, right? The added one will now be this current year good minus this previous year, so that you give us almost that same thing for what we have. So beginning users plus new users. So here it's easy for us to see the added users for each respective period, right? And we can always consolidate it into yearly. So for 2022, how many users? So I think this is just 398 users. I think that that's the field. We can always adjust this later. Now for the active users, the active users, let's say active users will now be so percent, so it will be percent, percent of our base users. I'll be percent of our base users, percent of our base users, right? So I can just copy this format and put it here. So let's say for this period, let's see how that will go. In our fourth year, percent of our active users might slow it down a little bit. Let's even say like 50 percent and let's hope we can increase that by 10 percent. So this plus 10 percent. So remember, these are imputes. So let me copy it and paste it back as value. This must not contain any formula. Remember, they are imputes, so they can always come back and adjust it. Just use that to be able to get that. So 50 percent, 60 percent, 70, 80, 90, supposed to slow down a little bit as well, right? Because we are saying I have 1,000, 50 percent of 1,000. Now if you have 10,000, you are now saying 50 percent or 10,000 is still greater than that 50 percent of 1,000, right? So I think she's slowed down a little bit to make the 60, right? To make the 60 so that the financial will not be shouting up and down, right? Just say you some people's model. Say the figures shouting. So percent of our active users, right? So unless I have our turn rate, I can also copy this as well, right? And put it here. So our turn rate, let's just keep it at 10 percent for now. Remember, it's a model, right? So without the layouts, when you have the output, you can always come back and change the input. Now, so let's, let's, so we have this, right? Any other thing we need, we can always, we can always bring it back here. For the revenue, let's say savings, what is the percent? So percent of active users, percent of active users that will be saving on the platform. So let me just copy this, right? So percent that will be saving. So remember our active users is a percent of our base users. So you can see how that link and how the business kind of operates, right? Active users is a percent of our base users. They were now saying, from these active users, what percent we actually be saving on the platform. So the first period, first LSE 40 percent, right? They really don't have confidence in us yet. So maybe if the year two, now we're getting grand, we have our standard and the U-Thing. So we can now start to increase it. Here, let's say 60, then 65 and 65, okay, or 70. So we have more people that save, right? Because they, they now trust our, they trust our platform, right? So those are more like things you need to think about. So people that save, also definitely we need withdrawal. So withdrawal or the percent would be withdrawal. So this, this will also be, so let's say percent per month. So withdrawal will be, will be based on monthly period, right? So maybe we should just, let's keep this as, as maybe 25 percent of people will be withdrawing their money of, of their months saved will be withdrawn, will be withdrawn, right? Is that right? Is that correct? We can work with that. So what other things do we need? What other things do we need? That is doing it. What other things do we need? So now let's, let's, let's look at our average deposits. So average savings are users, right? And this would be, so let me use my, my company, my, my country currency, NERA, right? So more like NERA per month. So how much would they be saving per month, right? So, so let's put that as our base period. So maybe let's say average person will be saving like 20,000 monthly, right? And we can now increase that. So average, average, average savings, growth monthly. So that would also be, so let me just copy this from us, put it here. So I think this should be, so maybe let's just keep everything 10 percent constants for now. Remember the countless, countless. And the other thing we need to consider is average saving, savings time. Someone can decide to save 20,000, two times in a month, or 1,000, or 20,000, 30 times in a month before. At least let's just keep it at 1 percent for now. That's number of times someone can save on a platform, maybe one time, two times on a duty, right? So we draw, let me put this. So we draw a percent, we draw a percent of savings. So that is clear, percent of savings, right? Right, right. And one of that thing you can also do is you can also create scenario around this, right? So you are saying base year. So okay, what if you have this, what you can get more than that? So I case, low case, right? Best case, base case, base case, base case, you can create that scenario. So it's always very, very interesting, right? When you are dealing with a typical fintech. Then what would be the yield? The yield on savings. Someone that is saving on a platform, definitely to actually, to entice them, we need to be able to give them a percent, right? But I think the percent is always more like a yearly home. So let's put it as percent per, per hanum, per year, per year, per year, per year, anyone. So I think we're okay. So for this, what is the average you can actually get if you are depositing money now? Looking for, at least for now, let's just put some pretentious assumptions. Let's just say ten percent. Let's leave that for now. Let's leave that for now. Now that we have our savings, let's go straight and let's have our, let's have our loans, our loans impute, right? Loans and advances, advances impute. So, so, so the word, as I said, we might decide to just make today to get all these assumptions. Then next period, we then try to do the, start the, the other part of it. So we make it more like this is part one, then with another part two. And I know we, we still have one part that we did on our visualization that we did December also, right? We need to revisit some of them. So the first one is what will be the percent of active, of active users, of active users that will be taking our loan. So let me just copy this format and put it here. That's what will be the percent, what will be the percent, let's be the percent. So a percent of people that will be taking, I think we should have more people that will be taking loan than people that will be saving. That, that, that can be funny, right? So which means the business might need to go and source for funding to be able to meet up these guys, right? Let me just, just fictitious assumption, assumption. Let me say this plus 10, plus 10 percent, right? So let's just keep this, let me put it as a value, remember? So let's, let's have this for now. We can always change it and have our rest. So what is the average loan that we can give? So average loan to users, right? So this will also be more like a per month. Let me put it here so I can even copy this, this format, so that we can work faster. So I can copy that and put it here. Average loan that we can give out to users, right? Let's say maybe 10,000 are users, right? So what is the average, average growth? Let me, let me type that again. Let me just copy this. So average, let me say, so this will now be average loan, average loan growth, average loan growth, right? Okay. I don't think people take loan more than a percent of people who save. Don't worry, we can always, we can always adjust that, right? It's just input. Let's just put everything together first by time we start doing our calculation. If it's making sense, it's not making sense. We can always change that. So average loan times. This will also be per month. So let me just copy this unit. Okay. So for average loan, what should be the percent? Or be the percent, or be the percent, or be the percent. So let's say, okay, so for the average loan growth, maybe we should just put that as 15 percent, right? So remember we are saying it's from the savings that they have that they will be giving out loans. So which means there's already a capacity restriction there because you can only give out loans based on what the percent of savings that you have on grant. Now, if there, maybe you have some other source of funding or some working cash somewhere else, that would be another story. But for this one, let's put it like this. Right. Right. So also loan disboss. So let's look at loan disbossed. And that would be disbossed from our savings. And that would be disbossed from our savings, right? Or be the percent. So let me just copy this. So this should just be, this should just be my percent. So what percent will be disbossed out from of loan, right? So let's just put some, let me just put some fictitious. Let's say 40 percent, right? The subcontinent is loan period. So anybody that would give loan, what would be the period of the loan, loan period, right? So I think this should just be, so anyone would give a loan to should be able to pay us within 30 months. Just 10,000 error, right? We agree with me. It's just very simple. Then what would be the yield? I'm more like interest rate yield on loans that we give out, right? So I'm going to just copy this. So let's say average of 30 percent per month, right? That's about 30.5 percent per month. Our loans, right? This is what we have as our input. That's an, how do we now use this to build our dynamic, dynamic revenue components, right? So I think because of our time, let's call this our part one.