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Purchase Dr. Wright's timely Report titled "The How & Why of Technical Due Diligence" for US$25.
Read and Save Dr. Wright's Free pdf article titled "Technical Due Diligence, Errors & Uncertainty".
Read about Dr. Wright's unique Program that saves both Time and Money - Lowers Risk!
Read Dr. Wright's article published in the March 1, 2001, issue of "Expert-Zine.com".
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Discover this Quick and Easy Method to Quantify the Risk
of Business Ventures Before You Invest Your, or Your Client's, Cash!
The Problem
Today's economic climate is forcing businesses to look for new and innovative ways to increase profits through acquisitions, internal expansion, and the application of new technologies. However, all of these methods are risky since they each require increased future cash flow to:
- Quickly repay the up-front cash outlay, and
- Generate significantly increased total profits.
The conventional Business Plan, with its business model and Pro Forma has historically been used as the primary tool to justify making these up-front cash outlays. Many times, the entrepreneur is comfortable with all aspects of the Business Plan except its Pro Forma. It can be safely said that all too often this important Pro Forma is the least understood portion of the Business Plan! Therefore, the ability for a project to generate sufficient future cash flow is often based solely on the hopes and prayers that the actual income and cost items will meet the projections of the Pro Forma.
The Pro Forma makes an "educated guess" of each future income and cost item in an effort to estimate the potential cash flow and income that might justify the up-front cash outlay. Some of the doubts that should quickly come to mind when using this process are:
- Are the input data for future cost and income in your Pro Forma simply educated guesses?
- Do the input data for future cost and income in your Pro Forma each have an uncertainty (or error) that is seldom, if ever, fully quantified or understood?
- Do you realize the uncertainties of your Pro Forma always increase as you move further out in time?
- Do you realize that you presently aren't quantifying exactly how all of these Uncertainties affect your total project Risks?
Therefore, if you want to control the risks that you automatically assume when you make these potential investments, then you must first learn to successfully quantify these uncertainties and then determine how they affect your project risk. This is not trivial!
Easy-Monte Carlo Pro Forma Analysis is Your Solution
Monte Carlo Risk Analysis is a proven method used to quantify the Risk of all types of projects including investments. The Easy-Monte Carlo Pro Forma Analysis offers you, the businessperson, a quick and easy method to use Monte Carlo Risk Analysis to quantify the risk in your potential investments. Some of the key benefits of using the Easy-Monte Carlo Pro Forma Analysis are summarized below.
- The financial data required as Input to the Easy-Monte Carlo Pro Forma Analysis are obtained directly from the Pro Forma of the Business Plan.
- If the Input data to the Easy-Monte Carlo Pro Forma Analysis are realistic, then the results will be realistic!
- The uncertainties for the Input to the Easy-Monte Carlo Pro Forma Analysis are automatically determined by your answering six simple business questions about the project, and then stating whether you believe the uncertainties for certain required financial data items are either Normal, Less than Normal, or More than Normal. You are therefore excused from having to understand the complex mathematics and statistics of the Monte Carlo process.
- The accuracy and precision of the project risk as calculated by the Easy-Monte Carlo Pro Forma Analysis process is automatically measured in terms of the likelihood (or Probability) that the project will meet certain financial goals in the Before Tax Profit, After Tax Net Cash Flow, and the Profitability Index. These are metrics that are familiar to the business world!
- The accuracy and precision of the project risk as calculated by the Easy-Monte Carlo Pro Forma Analysis process automatically reflects the uncertainties of the Input data.
- The accuracy and precision of the project risk as calculated by the Easy-Monte Carlo Pro Forma Analysis process automatically reflects the financial Input from the Pro Forma of the Business Plan.
The ability of the Easy-Monte Carlo Pro Forma Analysis to quantify business risk in a realistic manner is proven!
- The U.S. has successfully used the Monte Carlo method for more than 55 years to design nuclear weapons. It is relied on more than ever today since the testing of nuclear weapons is no longer allowed!
- The U.S. has successfully used the Monte Carlo method for more than 35 years in support of the Space Program (NASA). It is used to help put satellites in orbit, send men to the moon, and explore space.
- Dr. Wright has literally written the book on the Monte Carlo Risk Analysis of New Business Ventures - James F. Wright, "Monte Carlo Risk Analysis and Due Diligence of New Business Ventures", (New York: AMACOM, 2002).
- Dr. Wright has 20+ years' experience in evaluating Pro Forma in Business Plans. By using Easy-Monte Carlo Pro Forma Analysis you can get the quantified Risk Analysis you need while focusing your time and efforts on actually running your business.
- Dr. Wright created the Easy-Monte Carlo Pro Forma Analysis as an easy-to-use subset of the Monte Carlo method for businesspeople to use in quantifying the risk of Business Ventures.
How I Can Utilize Easy-Monte Carlo Pro Forma Analysis?
Here is the pricing!
- First Analysis of any project - only US$475.00
- The analyses of up to 6 additional scenarios for the same project only cost US$150.00 each. The parameters that can be changed between scenarios are:
- Investment Interest Rate for discounted value of cash
- Shareholder Distribution schedule
- Whether or not a 41% income tax is charged against income
- Debt payment schedule
Here's how we work!
- You Download at least the Input Data Questionnaire (leftmost Selection) and the Excel Input Worksheet (middle Selection) below.
- You complete the Downloaded Input Data Questionnaire using the data from your Business Plan's Pro Forma.
- You complete the Downloaded Excel Input Worksheet from data on the Input Data Questionnaire, above.
- Email the completed Excel Input Worksheet to drjfw@drjfwright.com by Email. Your return Email address is where we will send the invoice and Report when completed.
- We perform the work and write your Report.
- We notify you by Email when it is complete and include a link in the Email for you to follow where you will submit your Credit Card information.
- You follow the link in the Email and submit your credit card information for authorization (since 9/11 this may take up to 4 hours but is usually immediate).
- When we receive notice from the Credit Card Company that the charge is authorized we will complete the charge and send the report to you by Email. The total time for this process is approximately 1 workday.
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