THE ZIPGROW™FINANCIAL ANALYSTCALCULATOR GUIDE

www.ZipGrow.comhello@ZipGrow.com855-ZIPGROWCopyright © 2020Copyright © 2020

The new ZipGrow™ Financial Analyst Calculator is here to help you develop a financial plan that you can take to your investors and use for your business planning for your commercial indoor ZipFarm™. Feel free to reach out to our skilled team of growers with questions at any time. Happy growing!

Table Of Contents

OVERVIEWOverview .......................................................................................3

SHEETS

Intro .......................................................................................4Yield & Revenue .......................................................................................5CAPEX .......................................................................................6OPEX .......................................................................................7Statement Inputs .......................................................................................8All Stmts. .....................................................................................10

CONCLUSIONConclusion .....................................................................................13

If you have not already purchased the Financial Analyst Calculator, it is available online here.

The Calculator is separated into six different sheets, each one focusing on a different financial aspect of your farm. Intro, Yield & Revenue, CAPEX, OPEX, Statement Inputs, and All Statements.

As always, the more accurate the information that is inputted, the more accurate the results will be. So make sure you take the time to read through the calculator and instructions to ensure you have all the information you require. Getting stuck? No problem. Reach out to our team at hello@zipgrow.com or at 1-855-ZIPGROW for support.

Each tab in the calculator has instructions at the top of the sheet to let you know what you will need to do. Each sheet is also colour coded so you can easily see where you need to input information specific to your farm.

• Green - these are the calculator results, no need to edit these cells, they will automatically calculate based on the information you input in the yellow and purple cells.

• Yellow - this is where you need to add information specific to your farm.

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Overview

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SHEETS

IntroThis is the main tab where you will input information about your farm. You will need to know the dimensions of your grow space in your farm (length, width and height), as well as your local utility pricing.

Please note, your ceilings must be higher than 11’ and your growspace must be greater than 10’ x 25’ or the calculator will give an error. You will also need to input whether you are purchasing or renting your farm space, and what your plan is for staff, renovations, and vehicle use.

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Yield & RevenueThis tab is where you will input what you are planning on growing in your ZipFarm™, and how much you will be selling the produce for in your local market.

We have included two different options in this tab. You can choose to estimate a “General Production” value, based on average turn times and revenue prices for leafy greens and herbs.

Alternatively, you can choose to “Build Your Own Farm” and customize your Yield and Revenue results by separating your farm between six different leafy green crops and nine different herbs. Keep an eye on how many towers you can plant. Make sure to plant them all! In this option you will need to have a more thorough understanding of the needs of your local market place, but it will also give you more accurate results.

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CAPEXThe Capital Expenditure (CAPEX) tab is where your upfront costs will be calculated. This will summarize what it will cost you to get up and running, including all the components of your ZipFarm™, your property and renovation costs, vehicle and office expenses.

This sheet will fully calculate based on the information you’ve already provided, so no need to edit anything in the CAPEX tab.

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OPEXOnce you have your Towers planted and your CAPEX confirmed you can see what your ongoing Operating Expenditure (OPEX) will be. Again, this tab will generate results based on your Intro and Yield & Revenue inputs, so no need for edits in this tab.

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Statement InputsThis is where you will start to get into financial details. The Statement Inputs tab will calculate your ongoing overheads and other expenses, such as taxes, insurance, and interest. In this tab there are a few cells for you to add in details specific to your farm location to ensure the results are as accurate as possible.

The Owner’s Equity Cushion

When it comes to the Owner’s Equity Cushion, you should be asking: how much cash do you want inthe bank when you start your business? Use the owner’s equity cushion to plan for cash shortages. The default value is set to be conservative at 25%. This means that 25% of your total startup costs will be set aside as cash in the bank.

Percentage of Revenue Realized

This is asking how long will it take to reach 100% of your sales & production capacity. At minimum, we recommend 6 to 9 months to troubleshoot pest and management problems, and to bring on early customers. Default values are provided. Smaller farms may be able to hit 100% in their first year, while larger farms may take a while longer. A good goal is to reach 75% of sales capacity in year 1.

Taxes

Don’t forget to budget for taxes! There are a variety of different taxes you will need to budget for according to your specific tax rates.

Annual Increase

This includes both inflation (for business expenses) and any projected price increases (for revenues). Use these rates to plan for future growth.

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Statement Inputs

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All Stmts.Congratulations, you made it! This final tab summarizes all the information you have inputted into the calculator and produces a Pro Forma Income Statement, as well as a Return on Investment (ROI). This is the information you will need when presenting your business plan to a bank or private investors.

Many entrepreneurs argue about the value of business planning. Should you spend hours and hours working on spreadsheets and business plans, or should you just get out there and start hustling? We usually say, “why not both?” Your financial planning can give you valuable insights into the business, and help you make more informed decisions. At the end of the day, the goal is to have a realistic picture of your business’s financial health. The Pro Forma Financial Statements will give you an idea of what to expect. Keep in mind that these statements are projections, and your business will always have surprises in store for you.

The work you have done so far will be presented in the ALL STMTS tab in five important statements: • Balance Sheet • Income Statement • Cash Flow Statement • Financial Ratios • Internal Rate of Return

Balance Sheet

This statement is showing:

Short term assets Short term assets will include cash on hand and accounts receivable (sales). In the Startup Phase, we won’t have sales coming in yet. This number will also reflect how much cash we have in the bank. Since we kept 25% of our startup costs as Owner’s Equity Cushion, this number will show here.

Long term assets Long term assets will show how much value you have invested in physical assets. This will be the equipment, facilities, land or other assets that can’t be easily turned into cash. The value is decreasing over time due to depreciation.

Short term liabilities This is money owed to other people. This may be a credit card, or a payment that is due to a supplier.

Long term liabilities Long term liabilities is any money owed to other people that will take longer than one year to pay off. This will usually include loan payments.

Paid in capital This is the money that has been invested in the business. In other words, if you sold the business tomorrow, you would have to pay back the money to yourself and anyone who has invested in the business. This shows how much money you have tied up in the business, otherwise known as Equity.

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All Stmts.Income StatementThe Income Statement will show how much money is coming into the business as net income (profit!). To get there, we will simply subtract our expenses from our revenues.

After calculating these revenues and expenses, you will have a number called Profits Before Interest and Taxes (PBIT). It is important to plan for these expenses, since these can be a nasty surprise at the year end. The bottom line will be your net income.

Cash Flow StatementYour cash flow statement will show your expected inflow and outflow of cash. It’s important to have a good understanding of this so you can ensure you are getting paid when you should be, and paying others when you should be too.

Change Ratios, calculations, and Internal Rate of Return Accounting ratios can be helpful to understand the financial health of the business. In simple terms, we are looking at equity, debt, and cash flow. The goal is to decrease debt, increase cash flow, and increase owner’s equity.

The internal rate of return will be a useful metric for understanding the overall profitability of the business.

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All Stmts.

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ConclusionThis calculator is the result of years of experience and farming - don’t be afraid if it looks intimidating to start out with! The point of this calculator is to allow you to see the full picture of what starting and operating a ZipFarm™ looks like. If you’re considering a few different spaces this is the place to test out your options. By changing your inputs you will be able to see what the impacts will be on your CAPEX, OPEX, Rate of Return, and overall financial feasibility.

If at any point you are stuck we are just a phone call or email away. Don’t hesitate to reach out to the ZipGrow team at hello@zipgrow.com or at 1-855-ZIPGROW.

The Purpose Behind What We Do

Our VisionZipGrow’s vision of a better future looks like: a global attitude of people wanting to participate and contribute—and have equal access—to the highest quality, environmentally and economically sustainable produce possible.

Our MissionZipGrow’s mission is to design and manufacture the most economically viable, resource-efficient, and productive hydroponic equipment possible for people who believe in smarter, local food sources and want to participate in changing how people think about and access food.

Thank You!

Whether you’re a farmer, hobbyist, or anything between, by reading this document you’re taking steps towards being part of a better food system and for that we are truly grateful. We also realize that there are many great resources out there that are at your disposal and we want to thank you for using us as a tool to help you be more effective in your pursuit for local and sustainable food.

We hope this guide has been useful to you and if you have any feedback we would love to hear from you! We believe that the success of local and urban farmers is the success of the food system, so we make it our mission to help new farmers and growers everywhere see success in their efforts. If you can’t be successful then neither can we so if you have additional needs or questions outside the scope of this manual, please contact us!

www.ZipGrow.comhello@ZipGrow.com855-ZIPGROWCopyright © 2020Copyright © 2020