Hydroponics: Unit Economics Analysis Model

Description
There are all kinds of variables to consider in regard to the unit economics of a hydroponics farm. In this model, my focus is on configuring inputs around the square footage per crop, yield per square foot, pricing on yielded units (weight or count), and growth cycles. I have made it possible to configure all of these inputs for up to 20 crop types and they can vary in their start month, which helps make it easier to plan for future scaling.

As far as variable costs go, this too was based on growth cycles and the average cost per growth cycle. I broke that down into an average cost per month for each crop and there are cost items such as nutrients, water, seeds, packaging / transportation, pest/disease control, testing kits, waste disposal and growing material. For growing material, I considered it a depreciable item with a manually entered refresh rate. This cost is based on active square feet and the length of time it lasts. Those variables together are used to determine the purchasing cost and timing of that over the life of the financial projection.

There is another variable cost to consider and that is electricity. For that, the model focuses on equipment purchases over time and the watts used for each. Based on the total active watts and cost per kWh, an energy cost line item will populate. You can account for things like lighting, water pumps, temperature control, ventilation, and more in this section.

To best represent the purchasing of variable expenses (other than water and energy) I matched the frequency up with the growth cycles so the cash flow going out matches this pattern, however long the growing cycles may be.

Also, for revenue, the model assumes there is cash coming in monthly once the crop 'starts' and this is to account for the fact that often money is received at the start of the growth cycle rather than only at the end. To get a nice even number that doesn't double count or miss the correct revenue, I simply took the total expected revenue for each growth cycle and converted it into the proper monthly amount. For example, if the growth cycle is 8 weeks and in those 8 weeks the total expected revenue is $1,000, then I convert that into a monthly revenue of ~$540 on average.

There are also fixed operating costs that don't tie to any specific variables. This is to account for corporate overheads, rent, and other ongoing monthly expenses to keep the business going.

I included a 3-way model (or integrated financial statements) that adjusts as the assumptions change. This includes a monthly and annual Income Statement, Balance Sheet, and Statement of Cash Flows.

There is also a DCF Analysis, option for debt funding, and options for inside and outside equity investments as well as an annual Executive Summary. I included monthly and annual pro forma detail tabs to see how all the assumptions flow together to come up with EBITDA and final cash low per period. The model solves for the minimum equity required to keep the business afloat based on all startup costs and net burn.

Finally, there are plenty of visualizations to help convey the investment case and high level financial projections.

This template is also included in two bundles:
- All Models Bundle: https://www.eloquens.com/tool/P8Y4TX4v/finance/financial-forecasting-models/financial-models-120-useful-and-usable-logic
- Industry-Specific: https://www.eloquens.com/tool/lrNGt2jL/strategy/business-plans/business-sector-bundle-35-bottom-up-financial-models