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Any thoughts on the best way to reflect total cost of Investment in the Business Model? Options are, use the amortized annual amount to match annual Revenue estimate, or use the full amount and Capitalize Revenue stream over life of the investment?
Same question wit regard to interest expense, or this too much detail at this stage, since interest expense will be depend ultimately on the project funding.
Would appreciate knowing how others have dealt with this in their business model build up.
Hi Chuma. Cash flow anlysis is a useful tool for bringing sanity into a business plan. So I would be doing this early in the process with the core team and using the assumptions, revenue & cost numbers in the BMC sessions. So for me, it would be option 1, and interest would be based on funding assumptions in the cash flow. I see an overlap between cash flow analysis and BMC, but Alex has created a great visual tool to make number crunching look sexy.
Shanti, Thanks for your input. I agree that some cash flow estimate is necessary even in the BMC stage. Helps to keep the process real.
By the way who is Alex? I am new to this forum. Is there a link to his number crunching tool?
Hi Chuma, Alex Osterwalder is the co creator of the Business Canvas Model and the book Business Model Generation. I was refering to BMC as a very visual & creative way to understand the impact of numbers. I think there are quite a few templates around for generating cash flows..