Building up a Brixx plan a 24 minute demo transcript header

Building up a Brixx plan – a 24 minute demo [Video]

Hi, Robin here. It’s about time we released a video demo of Brixx – so here it is!

In this demonstration, I’ll guide you through the core functionality of Brixx.

You’ll learn what the strengths of Brixx are, and about the basics of building a picture of your business in Brixx.

This is a “back to basics” demo, the kind I would give to introduce people to Brixx and how it works for the first time. Perfect if you’re just getting started in the app!

I remember one colleague used to say you could spend 30 minutes giving a demonstration with just one item in the plan – he was right, but I’ll add a few more than that in this video.

We’ll cover:

  • Starting a plan
  • Adding structure
  • Adding components
  • Drilling down in reports
  • Copying components, & switching them on and off
  • Using the Timeline
  • Structuring different businesses

Let’s get going – you’ll find the transcript below, complete with all my “Alright”s and “Ok”s.

Thanks for watching! You can find more videos, including a Getting Started training series on our YouTube channel!

Video Transcript: Introducing financial modelling in Brixx

Hi there, my name’s Robin and I’m a Product Manager at Brixx. I’m going to give you a demonstration of the software today, showing you what makes Brixx unique and giving you a tour of the features of the app. 

We’ll build up a simple plan so that you can grasp the core concepts behind Brixx – and then take a look at some plans I made earlier! 

First I should introduce you to us.

Brixx is a financial modelling tool, designed to help businesses plan for the future. We believe in making financial models accessible, flexible and testable. But – what do I mean by a “financial model” here? You’ve heard of a financial plan, but a financial model is something that can be used to build multiple plans, multiple plans, multiple scenarios. It’s a picture of a business. Something that encapsulates all of the financial activities that a business performs in one cohesive whole, that’s easy to understand and ask questions of.

So, without further ado, let’s get started!

Getting started with Brixx

I’m here at the moment on the Your Plans screen. This is what you’ll see when you log in to Brixx. Here are two plans that I’ve made earlier – we’ll have a look at those in a bit. I’m going to start as everyone does by making a new plan, here. And I’m going to start by giving this a name.

Now, I’m just going to give you an example here as we build this up. The first business I was involved in was an audiobook business, so, I’m just going to call this “Audiobook Business”. This name is going to appear at the top of the reports of the plan and any downloads that you make as well.

So, the next thing I’ve got set here is the start date of my forecast. I’m going to set this to the start of 2021, and I can also choose the duration of this forecast. It’s 3 years at the moment but I could make it up to 10. Let’s just keep it at 3 for this example.

Tax system here I’m going to leave off but I can set the plan to automatically calculate VAT, Sales Tax or GST. I want to keep the numbers really simple today, so I’m going to leave that “Off”. I’ll leave the currency here as pounds. We have a number of currency symbols you can apply to the plan here.

And finally, there’s this tickbox: “Start with a basic plan template”. Now, I’d recommend that you do this and keep this ticked if you’re building a plan in Brixx. It adds some structure to the plan to begin with but as you’ve got me here today – I’m going to turn it off and we’ll just build up something from scratch so that you can see how it works!

Alright, with that done I’m going to click “Create Plan”. While that loads I’ll tell you a bit about the example we’re trying to make here. In the audiobook business that I was involved in we bought the licences to (sell) audiobooks from publishers for a fee and for each audiobook we sold we paid them that fee. We got cash directly from our customers who were normal consumers. So that’s what I want to set up here, just receiving income from customers and paying a fee to publishers. And we’ll probably get into a few other bits and pieces with assets and loans as well.

Adding structure and figures

Alright, so! This is the main planning screen of Brixx. On the left-hand side here in this dark panel, this is where you build up the structure of your model. We use sections and groups as containers for components that are the building blocks of your plan in Brixx. But – I won’t get ahead of myself! Let’s see it in action in a moment.

On the right-hand side are the outputs of the plan. This is a financial Dashboard, at the moment you can see it’s got a number of charts here. We’ve also got reports: Cash Flow, Profit & Loss and Balance Sheet. And a Timeline, which we’ll get to in a bit. Ok, let’s head back to the Dashboard. I’m going to start here by adding a section. This is a bit like a “Folder” in Windows, a container for other items in the plan. You can name these however you wish to it make it unique to your business. The first section I’m going to add is going to be “Sales”, something that’s probably common to a lot of business plans in Brixx. I’m now going to a group, and in the audiobook business we divided our sales by publisher, so I’m going to call this “Publishers”. 

Now, as soon as I have added this I get the option to add these components. These, as I said, are the building blocks of the plan. And each one encapsulates a certain financial activity. An Income component, for example, adds a source of income to the plan. But you can also use it to calculate things like tax payments on that income, the number of units that you sell, and so on.

More complex components include things like Assets, which will add one of later, which add the purchase of a physical item to the plan and also handle any depreciation of that item and any sale value, if you wish to get rid of it.

For the moment, I’m just going to add an Income component here and we’ll start building out this picture of the business that I talked about at the start. A picture that you can understand no matter how you come to it. 

So, I’m going to open my Income component here and you’ll see I’ve got a lot of options. Here I can fill in data – at the top I’ve got the name of the component. I can rename this to one of the publishers that we were involved with, one of the larger ones, let’s say “Random House”. And I can choose when this lasts (to), I’ll show you that in a minute on the Timeline.

What I’ve got here now is a choice between how I enter this income, whether it is entered as Income or Income per Unit. I could enter an amount of income for each unit that I sell, or just an amount of Income that I forecast to receive. I’m going to keep it simple and just choose “Income” here. And let’s say that I receive £1,000 per month from Random House. I can also delay when this income appears on my Cash Flow, and I’ll show you an example of that later on. I’m just going to Save now, and show you how this flows through to our Dashboard and Reports. 

Reading the Dashboard and Financial Reports

So, you can see just by adding this information, I’ve started to populate our Dashboard here. I’ve got figures coming through to sales each month and I’ve got this cumulative cash line that’s increasing. I’ve also started to populate some of the large numbers at the top of the Dashboard. I’m looking at the moment for the period of 2021, the whole year. And so as I’m generating £1,000 a month with this Random House audiobook publisher here, I’m generating £12,000 a year. 

Let’s take a look at how this affects the Reports as well.

On the Cash Flow, I’ve got “Cash Received” here at the top and my cash is being affected by Random House audio, what I’ve just put it. If I want to drill down and see where this information is coming from in a large plan, I can do so by clicking on this arrow next to Cash Received. First I’ll see “Sales”. This is actually the name of the section here on the left. When I drill down again, I see “Publishers” and finally, when I drill in further I see “Random House”. So, this structure here in the report mirrors the structure that I’ve built on the left-hand side of the plan. This makes it very easy to interrogate reports in Brixx, as underneath these top-level account headings you’ll be able to see the structure of the plan that you built and you have named.

Ok, so this is the Cash Flow report here and it’s pulling out our Operating Activities, our Income Less Payments and giving us a Closing Bank Position that’s increasing by £1,000 each period at the moment, because there’s nothing else going on in the plan. Just as an aside here I’m looking at this report at the moment in Months, I can also look at it in Quarters, or I can look at it in Years. This is just a touch of a button to change the report view. I can also look at different periods of the report, I can look at the first year, the second year or the third year. These are controls that are common to all reports in Brixx. 

Let’s go to the Profit and Loss next. You can see I’m getting Revenue through from this Income component and again if I drill down I can see exactly where this Revenue is coming from. It’s also starting to fill out the Operating Profit and the Net Profit for the business.

Finally, on the Balance Sheet, I can see I’ve got Surplus Cash each period, and also Retained Profit. Now, this is quite key. In Brixx you’ll have seen that this Income component is doing all of the double-entry that’s required to keep this Balance Sheet balanced. And this is something that is quite interesting and unique about Brixx, it will always do the double entry for you, ensuring that you have a balanced Balance Sheet. The only way you can become unbalanced in Brixx is by changing your Opening items to something that’s unbalanced but as long as you are forecasting the future Brixx will always handle every side of the financial reports for you.

So, let’s add another component here. In Random House I’m going to add something that’s called a “child “ component in Brixx. I’m going to add a Cost of Sale that’s associated with this. So I just click here and it’s added as a child of Random House. Now, this is the payment that we’re going to make to the publisher. For each audiobooks that we sell, we pay 40% of that revenue to Random House. What I’m also going to do here to make things a bit different is add a Delay. So, I’m going to add a 1 month delay to when we pay this cash. Let’s say that we have an arrangement with the publisher where sell their audiobooks one month and then we actually pay them the sum the next month, perhaps to ensure a correct count of the figure that we owe them.

Alright, let’s save and close, and we’ll go to the Cash Flow. So! The cash amount that I am paying is £400 – 40% of £1,000. And you can see that in January I don’t make a cash payment. This is because of the 1 month delay that I have put on the cash payment. If I drill down here on Cash Paid on Goods and Services you’ll see the Sales section, the Publishers group, Random House, and underneath it the Cost of Sales component that this figure is coming from.

Let’s go now to the Profit & Loss as well, and take a look there. Ok, so we can see here my Gross Profit is being affected, but it’s being affected in the first month. What’s going on here? Well, the Profit & Loss IS taking into account the Cost of Sales happening immediately, it’s only being delayed on the Cash Flow because we recognised this cost on the Profit & Loss when it is owned, rather than when we receive the cash.

Finally let’s have a look on the Balance Sheet here. We’ll start to see Accounts Payable coming through because in January we owe £400. I can see where this is coming from in the plan as well – it’s coming from Sales, Publishers, Random House and the Cost of Sale component underneath Random House. Alright, if I just scroll down to the bottom here as well you’ll see that our Balance Sheet is still balanced.

Ok, let’s head to the Dashboard and just see how this has updated. You’ll now see a cost coming through on this Cash Flow chart at the top, each month except for the first because we are delaying the cash payment.

Growing your model, adding costs!

Alright, we’re starting to get a bit of a picture of how this business looks. Let’s add in another publisher and see how this changed our plan. So, I don’t need to go through and add these components again, I can just select them and copy them. And we’ll rename this random House one, to Blackstone Audio, this was another of the publishers that we had a deal with. And let’s say that in Blackstone Audio, I forecast to receive £2,000 per month and in the Cost of Sales component we pay them 30% rather than 40%. And I’ll keep that 1 month delay there too.

Well, alright let’s save and close and let’s have a look at the reports. So, on the Cash Flow report, at the top you can see I’ve now got more cash being received and more being paid. If I drill in though you can start to the section and groups we’re building up coming into action. Now when I drill down I can see both of my publishers here and I can see the difference between them. There are a few other tools that I can use test things in Brixx. For example, if I want to see how this plan looks without Random House, perhaps the deal with them doesn’t go through, I can turn Random House off, and this will recalculate my reports immediately to just include the information from Blackstone Audio. And you can do this with any component, or group or section in Brixx. Just turn things on and off to test scenarios.

Moving business activities in time – on the Timeline

Alright, next let’s have a look at the Timeline. In Brixx, everything sits on a backdrop of time. All components, all groups and all sections take place at a certain point in time, and this is to make it like a real-world business. Every financial activity in a business happens at a certain point in time, and if we are forecasting the future then understanding when things happen and the differences that can be caused by things happening earlier or later is critical. I can change when things happen in the plan just by moving these bars on the Timeline. So let’s say that our deal with Blackstone Audio here doesn’t go through until two months have passed. Let’s say that I don’t actually get the option to sell Blackstone audiobooks until two months after the start of the plan.

Let’s see how this looks on my reports. You’ll see, immediately Blackstone Audio has crept two months into the future here, and so has the cash that I am paying to my supplier. That’s gone into the 4th month of the plan here. The component starts here, the cash is delayed 1 month and so we make our first payment to Blackstone Audio in April 2021. 

Adding a simple asset

Alrighty. Let’s just add a couple of other components here and I’ll show you how they fill out the reports.

First of all we’re going to add an Asset. Something a bit different to what we’ve been looking at so far but something that’s important to the business. Brixx doesn’t just produce a Cash Flow or a projection based on cash. As you’ve seen it also has a Profit & Loss and a Balance Sheet. And this is why things like Assets bring out a full picture of the business. So, I’m going to add a new section here and call it “Assets”. And we’ll add a group and I’ll just call this “Office Equipment”.

Now, you could name this whatever you like of course, but in this instance, I’m going to model adding some computers to the plan. These are what we require to do our business as a digital audiobook company. So I’m going to add an Asset component here and rename it “Computers”. Now let’s say they cost us £10,000 to buy all the computers and equipment for this business. And I’m going add in some depreciation as well, you can see I’ve got a few other options that I can do as well, but let’s just add depreciation for the moment. And let’s say that they depreciate at 40% per year, just for example. And I’ll save and close this.

So, what do you expect we’ll see on our reports? Well, in the Cash Flow in the first month we see the purchase of this Asset – £10,000. Again if I drill down I can see the section that I’ve added followed by the group that I’ve added, and then the name of the component itself that’s generating this figure.

Alright, let’s have a look at the Profit & Loss. We’ll see depreciation coming through here on the Profit & Loss. We can see the total here is £4,000 for the year and that’s being divided monthly here. Again if we drill down here into Assets, Office Equipment and Computers, we can see the source of this depreciation expense in the plan.

Ok, and finally, on the Balance Sheet, we’ve got a Fixed Asset line now at the top. This is the end of day value for this asset each month. You can see it’s declining here as we apply depreciation to this asset. Scroll down to the bottom and you’ll see that we’re still balanced. But what we do have in the plan now is some Short Term Borrowing. Brixx is assuming that we have the cash to pay for this asset, and it’s using that information to balance our Balance Sheet.

Adding funding from a loan

So we’re going to need to put in some funding of some kind in order to purchase this asset – another financial activity that we will add to the plan. We can see this very clearly on the Dashboard here. In January I have a very large cash expense from this asset purchase here. Alright, and I can see my Funding Requirements are up here in the top right. So, I’m going to need to add some funding to the plan in order to be able to afford this asset, otherwise, I’ll go bankrupt immediately!

So I’m going to add a new section here. And let’s call it funding. We’ll add a group, let’s just call it funding group, and a loan component. A loan component allows us to borrow money and pay it back over time, adding interest to that payment as well.

Let’s say I borrow £10,000 and it’ll be a 5 year loan, and we’ll set an interest rate of 5%. Let’s now save and close.

Okay, so, you can now see, we don’t have any funding requirements any more and the dashboard’s looking a lot more healthy. Our cash line here is rising throughout the course of the plan. Our other charts are starting to be filled out as well. We’ve got a cost breakdown chart here, showing the split between capital repayments, interest paid, cost of sale and our asset purchase. Down the bottom, we’ve also got an asset chart, that’s increasing throughout the plan and showing the difference between the amount of asset value we have from our computer equipment and the growing value of cash in the business.

Ok, that takes a look through a lot of the functionality that I want to show you today in this very simple plan.

Looking at a complete business in Brixx

Now I’d like to show you some more complex plans that I made earlier, just to show you how this picture of the business that we’ve built here on the left, allows you to very quickly assimilate information about your business.

I’m just going to head back to the My Plans page, where I’ve got two plans that I made earlier to show you.

The first of these is a demo of the full audiobook business that I was involved in, so let’s take a look at that.

Actuals vs forecast variance

Ok, so, here’s we’ve got a lot more complex information going on and we’ve got a new line on the dashboard, this is actuals. This is one of the tabs at the top that I hadn’t shown you so far. If I click here, I can start to enter actual information for how my plan fared against my forecast.

So, by the time I get to February, I can start filling in February’s information, and when it gets to march, I can start to fill in march’s information, from each of these sources. This is the same for each of the financial reports.

We’ve recently developed an integration with the accounting platform Xero, which ill pull across the actual information automatically, and hold it against reports in the plan. I’ll show you how this looks right now. So, if I go to the cash flow, with show actuals turned on here. Then against each of the publishers, I can see how I actually did, and how much I forecast, with a variance for each. This is summed up when I minimise the Cash Received line, and broken down if I drill down into sales channels and publishers.

Testing a (very) simple scenario

On the left you’ll also see I’ve fleshed out this plan with a lot more components and sections, I’ve added staff, I’ve added some marketing costs, I’ve also added this section at the bottom, which is called expensive shows. Now, you might have noticed that when I went to my dashboard that this plan isn’t actually doing so well. It has a pretty negative amount of cash right here in the middle of the first year, and unfortunately, this reflects the reality of the business I was in.

We paid for some very costly shows near the start of the business which didn’t really generate that much revenue in return. So I’m just going to show you an example of a quick scenario, if I turn off all of these expensive shows and items that we purchased or these expensive hotels that we went to in order to attend this show, if I turn all these expenses off, let’s see how this affects my dashboard. We can see immediately that although I start to lose cash throughout this first year, it isn’t so detrimental, I don’t go into a negative amount of cash here. 

A look at a SaaS business in Brixx

Alright, let’s have a look at one last plan here to show you one last example. It’s a demo of a SaaS business (software as a service). I just want to use this to show you how you can use these components to build up very different kinds of business. You can see here that I’m looking at a SaaS HR platform as the example business, and I’ve added annual subscriptions, monthly subscriptions, a pre-existing service, agreements with other companies and I’ve added a lot of detail here into employees, especially on the timeline. So I’ve staggered when I’m going to be hiring new people, I’ve been able to add in my existing development and management team here at the top as well. 

In my reports, I can see this in my P&L and Cash Flow, here under staff costs I’ve drilled down so you can see employees and then management split out, the customer team who we’re gradually hiring throughout the course of the plan and the development team down the bottom. 

Alright, I’ll just head back to my cash flow. So I’ve shown you a lot of different features of Brixx here, if there’s anything I’ve missed out or anything you particularly want to ask when you build your plan, then I’d love for you to get in touch, just go to Brixx.com and get in touch with us there.

Thanks very much for watching everyone.

 

Robin Booth 5th August 2020 By
 

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