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financial-model/
saas-expansion-business-case.md
Markdown| 1 | # Financial Model: SaaS Expansion into APAC Market |
| 2 | |
| 3 | ## Business Case |
| 4 | |
| 5 | NovaCRM (Series B, $18M ARR) is evaluating expansion of its sales-automation platform into the APAC market, starting with Australia and Singapore. The model covers a 36-month horizon and targets internal leadership for a go/no-go decision. |
| 6 | |
| 7 | ## 1. Assumptions Table |
| 8 | |
| 9 | | Assumption | Value | Source | Confidence | |
| 10 | |---------------------------|-------------|-----------------------------------|------------| |
| 11 | | Monthly growth rate (APAC)| 6% | Comparable competitor APAC launch | Medium | |
| 12 | | Gross margin | 68% | Current P&L adjusted for support | High | |
| 13 | | CAC (APAC blended) | $520 | US CAC x 1.3 (partner channel) | Low | |
| 14 | | Monthly churn rate | 4.0% | US churn + market maturity adj. | Low | |
| 15 | | Average contract value | $960/yr | US ACV discounted 20% for entry | Medium | |
| 16 | | Localization cost | $340K | Engineering estimate | High | |
| 17 | | Regional team cost | $45K/mo | 3 FTEs (sales, CS, marketing) | High | |
| 18 | |
| 19 | ## 2. Revenue Projections |
| 20 | |
| 21 | | Metric | Month 1 | Month 6 | Month 12 | Month 24 | Month 36 | |
| 22 | |---------------------|---------|----------|----------|-----------|-----------| |
| 23 | | New customers | 20 | 35 | 60 | 105 | 180 | |
| 24 | | Churned customers | 0 | 8 | 22 | 52 | 88 | |
| 25 | | Active customers | 20 | 145 | 310 | 720 | 1,380 | |
| 26 | | ARPU (monthly) | $80 | $80 | $84 | $88 | $92 | |
| 27 | | MRR | $1,600 | $11,600 | $26,040 | $63,360 | $126,960 | |
| 28 | |
| 29 | Formulas: Active = prior active + new - churned. MRR = Active x ARPU. ARPU grows 5% annually via upsell. |
| 30 | |
| 31 | ## 3. Cost Structure |
| 32 | |
| 33 | | Cost Category | Type | Driver | Month 1 | Month 12 | Month 36 | |
| 34 | |-----------------------|----------|-----------------------|-----------|-----------|-----------| |
| 35 | | Regional team | Fixed | Headcount plan | $45,000 | $55,000 | $85,000 | |
| 36 | | Cloud infrastructure | Variable | $18/active customer | $360 | $5,580 | $24,840 | |
| 37 | | Sales & marketing | Variable | CAC x new customers | $10,400 | $31,200 | $93,600 | |
| 38 | | Localization (amort.) | Fixed | One-time / 24 months | $14,167 | $14,167 | $0 | |
| 39 | | G&A allocation | Fixed | 8% of HQ G&A | $6,000 | $7,200 | $9,600 | |
| 40 | |
| 41 | ## 4. Unit Economics |
| 42 | |
| 43 | | Metric | Launch | Month 12 | Healthy Benchmark | |
| 44 | |------------------------------|---------|----------|-------------------| |
| 45 | | CAC | $520 | $520 | < LTV/3 | |
| 46 | | LTV (gross margin / churn) | $1,360 | $1,428 | > 3x CAC | |
| 47 | | LTV:CAC ratio | 2.6x | 2.7x | > 3x | |
| 48 | | CAC payback (months) | 6.5 | 6.2 | < 12 months | |
| 49 | | Gross margin | 68% | 70% | > 65% (SaaS) | |
| 50 | |
| 51 | **Flag:** LTV:CAC ratio is below the 3x benchmark at launch. The model depends on churn improving from 4.0% to 3.0% by Month 18 to reach 3.2x. If churn stays at 4.0%, the expansion is marginally viable. |
| 52 | |
| 53 | ## 5. Scenario Analysis |
| 54 | |
| 55 | | Metric (Month 36) | Bear Case | Base Case | Bull Case | |
| 56 | |------------------------|----------------------------------|-------------------------------|---------------------------------| |
| 57 | | Assumption changes | Growth 4%/mo, churn stays 4.0% | Growth 6%/mo, churn drops 3% | Growth 9%/mo, churn drops 2.5% | |
| 58 | | Active customers | 680 | 1,380 | 2,450 | |
| 59 | | ARR | $750K | $1.52M | $2.71M | |
| 60 | | Cumulative cash flow | -$620K | +$380K | +$1.9M | |
| 61 | | Cash-flow positive | Never (within 36 months) | Month 22 | Month 14 | |
| 62 | |
| 63 | ## 6. Cash Flow and Runway |
| 64 | |
| 65 | | Quarter | Revenue | Costs | Net Cash Flow | Cumulative Cash | Runway (months) | |
| 66 | |---------|-----------|-----------|---------------|-----------------|-----------------| |
| 67 | | Q1 | $18K | $214K | -$196K | -$196K | 15 | |
| 68 | | Q4 | $72K | $268K | -$196K | -$680K | 10 | |
| 69 | | Q8 | $198K | $276K | -$78K | -$840K | 8 | |
| 70 | | Q10 | $312K | $298K | +$14K | -$780K | Positive | |
| 71 | | Q12 | $456K | $348K | +$108K | +$380K | Positive | |
| 72 | |
| 73 | Initial investment required: $900K. Bear-case runway hits zero at Month 28 without additional funding. Base case breaks even at Month 22. |
| 74 | |
| 75 | ## Recommendation |
| 76 | |
| 77 | Proceed with APAC expansion contingent on two conditions: (1) secure $900K earmarked budget with board approval for bear-case loss of $620K, and (2) define a Month 12 checkpoint where churn must be at or below 3.5% to continue. If Month 12 churn exceeds 3.5%, trigger a wind-down plan to limit losses to $680K. |
| 78 |