Radhika Chopra, No. 3 Clive Road
Radhika Chopra is the founder of No. 3 Clive Road, a luxury tea brand based in India. The young company has always enjoyed solid press coverage in many Indian fashion and lifestyle magazines, which has drawn strong inbound demand from five-star hotels, trendy restaurants and high-end retailers. Radhika, a talented marketer, needed a strategic partner to help take her brand global.
Radhika came to Muse to gain a deeper understanding of her company’s financials and to chart a growth strategy that she could present to potential business partners. We first analyzed the company’s variable cost structure. Like many entrepreneurs, Radhika knew how much she was spending on raw materials, but did not monitor her gross margins by product or customer. This exercise identified where she needed to negotiate lower costs and where she needed to raise prices to ensure a healthy and acceptable gross margin. Within 24 hours of completing the analysis, Radhika created an action plan with her staff, which was fully executed within 30 days.
We focused next on cash flow. By analyzing working capital and sources and uses of funds, we found a bloated accounts receivable (AR) balance resulting from hotels extending payment past six months. Unfortunately, this is a common reality for many small businesses whose large customers are the slowest payers. We recommended that Radhika assign one staff person to create an action plan to work with clients to reduce their payment time. If after 60 days there was no meaningful improvement, we suggested that she factor her AR to a third-party.
Finally, we worked with Radhika to define her growth strategy within India. While she had a refined revenue model, she hadn’t developed a full customer acquisition strategy since she was enjoying fruitful inbound demand. We helped Radhika expand her lead-generation strategies by building funnel metrics, which were then used to forecast revenue and customer acquisition costs.
Amanda Patterson, The Call List
Amanda Patterson is the founder of The Call List, a subscription-based media platform that connects influencers with their followers via easy-to-use live video. Amanda came to us to build a financial model that she could present to investors. At that point she had only one major brand as a customer but felt she could successfully adapt her product to multiple use cases. Amanda envisioned five revenue streams catering to different customer-types. For each use case, we worked with Amanda to define a unique revenue model, associated variable costs and customer acquisition strategies that she could employ. Next we built a financial model which included gross margin by revenue stream, and a fully integrated income statement, balance sheet and cash flow statement. Upon review, it became clear that the Small-Medium Business (SMB) customer pricing plan could not support its heavy variable cost structure and would bleed the overall business of cash. Amanda eliminated the SMB version of her product before spending the resources to market to this group and waste precious resources later on.
Victoria Feder, Tirta
Victoria Feder, owner of Tirta LLC, purchased the assets of Online Marketing Institute (OMI), an online provider of digital marketing education for individuals and businesses. OMI was founded in 2007, merged with another digital marketing company in 2015, was subsequently mismanaged and put up for sale in 2016. Victoria, an operator at heart, purchased the assets in auction with the plan to turn around the B2B subscription-based business. When Victoria came to Muse she needed help with her strategic resource allocation. Although she had a clear idea of her overall revenue model, she had not fully developed her pricing economics or customer acquisition metrics. We worked with Victoria to refine these variables and then built a revenue model that included underlying unit economics. As a result, Victoria was able to identify her most productive lead generation sources and adjusted her marketing spend accordingly. We also helped her construct graphs that were helpful for visualizing key financials, and a KPI tracking sheet which prompted Victoria to regularly review her key metrics and keep better track of the financial health of her growing company. Victoria subsequently sold OMI to a strategic buyer.
Felicia Rubinstein, Hayvn
Felicia Rubinstein is the founder of Hayvn, a new co-working space for women located in Darien, Connecticut. At the time Muse connected with her, Felicia was evaluating funding alternatives for her build out, including an SBA bank loan and a private loan with the landlord with whom she was also negotiating a 10-year lease. Once we completed her 10-year P&L, cash flow and balance sheet projections which matched the length of her lease, we were able to assess how much cash Felicia would need to fund the business to cash flow break-even. After determining her capital needs, including the build out, furniture and equipment, as well as funding early operating losses, Felicia wanted to understand what kind of return both she and her potential lender could expect on their investment. By calculating the lender’s potential return on investment, Felicia gained important insights that helped her negotiate the loan transaction. Muse advised and supported Felicia throughout her negotiations and eagerly awaits Hayvn’s grand opening.
Paul Stratta, iPlayMe2
Paul Stratta is the co-founder of Belgium-based iPlayMe2, a freemium subscription-based B2C app for tennis players, pros and clubs. The app provides a platform through which players can connect with each other, and pros and clubs can connect with players to maximize the capacity utilization of tennis lessons and tennis courts. Paul came to Muse in anticipation of raising a second round of financing, but he wasn’t comfortable with his financial projections. Muse worked with Paul to create a more comprehensive revenue model that included refined assumptions on pricing, upgrade cycles (from free to priced subscriptions) and churn that provided a more realistic vision of revenue growth. In addition, we helped him establish a digital marketing strategy with performance metrics to measure the performance of the iPlayMe2 app. A digital marketing strategist was brought in to sanity-check his assumptions. Finally, we created an integrated income statement and cash flow forecast that not only allowed Paul to see the profit potential of his company, but also to understand his cash runway assuming different levels of financing. Paul now has a firm handle of the key growth levers of his business and how they can be refined to maximize iPlayMe2’s growth potential.
Alice Kittrell, Outgift
Alice Kittrell is the founder of Outgift, which uses machine learning and curation to help gift givers find the perfect gift for every recipient and occasion. When we first met Alice, she was in beta testing and reconsidering her revenue model. At the time Outgift was receiving affiliate fees for sending users to third-party websites to purchase their gifts. Although the “thinking” was done by the Outgift algorithm, the transaction happened on retailers’ websites, not on outgift.com. Given the lack of control and ownership of the customer relationship in the affiliate revenue model, Alice wanted to consider other types of revenue models. We talked through the various options – subscription, commission and dropship – with Alice doing the research with potential partners and Muse building models and providing advice. Alice ultimately concluded she wanted to use the power of social networking to support a subscription-based model where retailers paid her a monthly fee for promotion of their merchandise plus a commission on each sale. After working with Alice over the course of several months, Muse Advisors was delighted to be able to support Alice with a personal recommendation for the Chloe Capital pitch event in December 2018.
Claire McTaggart, SquarePeg
The Square Peg algorithm uses hundreds of job seekers’ attributes and matches them to the companies and positions most compatible with how they work. For hiring managers, the algorithm similarly finds job candidates who are compatible with open positions and organizations more broadly. Claire McTaggart, founder of Square Peg Hires and a graduate of the Founder Institute and Monarq accelerator programs, came to Muse Advisors with a tight deadline to prepare and present company financial projections to a well-regarded venture capitalist. Claire had prepared a first version of her company’s financial model, but because it was limited in scope, she wasn’t comfortable sharing it with potential investors. Muse walked Claire through the step-by-step process of building a more detailed and complete version of her financial model that she now uses to make her day-to-day decisions. Because Claire participated in the rework of the model, she can clearly explain the underlying model assumptions and projections. Claire improved her investor presentation by incorporating much of the data and assumptions from her revised financial projections.
Nora Gardner came to us when she was at a crossroad in her business. She had a successful Madison Avenue store front and thriving e-commerce business providing women’s workwear to millennials, but she wanted to take her business to the next level and secure venture funding. Nora had lots of ideas on how to increase her revenue 10x but did not have a workable financial model to quantify her ideas. Muse worked with her to define the key drivers of each of her revenue streams and used that as a starting point to forecast revenue and cash flow for her existing business and the new ventures she was contemplating. Working together, Nora was able to create a roadmap to efficiently grow her business. Next, we helped her define the data she should be collecting and provided the infrastructure to analyze and use it to inform decisions. Finally, we provided her with clean financials that clearly articulated her growth story to investors. We continue to provide strategic guidance to Nora when we review her financials with her during our monthly calls.