Working Capital Template - Quick Demonstration
About this lesson
Who cares about working capital? The answer: everyone running a business should. It’s the lifeblood that keeps operations running smoothly and ensures that a company has the necessary cash flow to sustain itself. I find this topic to be wildly important and unfortunately frequently overlooked. So I created a new Excel template to help ASM subscribers explore its significance. Download here: https://www.asimplemodel.com/insights/working-capital-excel-template-example In the video, and with the help of AI, I created a fictional business that sells dog chew toys. More precisely, the ChewNicorn: a dog chew toy shaped like a unicorn that sheds glitter when squeezed (see video for images). As a reseller of dog chew toys, you explore two different options to go to market: The first is a direct-to-consumer model using targeted paid ads on social media to generate sales. With this strategy, you believe you can sell 1,000 units per month. Unfortunately, the manufacturer requires payment upfront, and the good cannot be delivered for three months. In the second example you decide to sell directly to pet stores and redirect your marketing budget towards hiring salespeople. By selling to pet stores you can increase your monthly volume to 10,000 units, which allows you to negotiate better payment terms with your supplier. As the video demonstrates, what you negotiate and how you pay suppliers and receive payment from customers (B2C vs B2B) can have a significant impact on profitability. Note: This first tutorial was admittedly recorded as a test that I later decided to publish (it moves a little fast), but I thought it would be a great way to open the topic to questions for future examples using the same Excel file (or some variation of it).
DeepCamp AI