Unlock Exclusive Financial Modeling Insights on PassportOS
For founders, building a solid financial model can be one of the most daunting, yet critical, tasks on their startup journey. OneValley’s PassportOS offers access to a robust library pre-loaded with educational resources. These resources allow entrepreneurship support organizations to provide on-demand access to practical guidance on financial modeling and other key areas where founders seek support.
OneValley has partnered with Forecastr to provide highly-actionable content about financial modeling. Below, we’ll explore some of the valuable content included in OneValley’s Passport OS resource library, specifically some financial modeling tips from Logan Burchett, Co-Founder and COO of Forecastr.
10 Financial Model Tips from Logan Burchett of Forecastr
Financial modeling is a critical aspect of managing and growing a startup, and it’s a challenging area for many founders. Below, we’ve consolidated some guidance from Logan Burchett, Co-Founder and COO of Forecastr. Logan has a wealth of experience in financial modeling and, with Forecastr, is on a mission to help other founders with their modeling endeavors.
- Understand the Purpose of a Financial Model
A financial model is much more than just a set of numbers on a spreadsheet. Logan explains, "We build financial models for two predominant reasons. One is an operational reason to help you run your business better. And the second reason is to help you raise money easier." By understanding this dual purpose, you can better leverage your financial model to set and achieve business goals while communicating your vision to investors.
- Start Out With a Template
A template can be a helpful resource, especially for those just getting started with financial modeling. Forecastr offers a suite of spreadsheet-based financial model templates available for free download on their website. For those ready to take their financial model to the next level, Forecastr provides financial model software and services that support advanced reporting and scenario planning.
- Focus on Your Revenue Formula
Identifying the right template and structuring your financial model correctly starts with an understanding of your revenue formula. "Whenever it comes down to it, everything goes back to revenue and understanding your revenue formula," says Logan. By focusing on the underlying mechanics that drive your revenue, you can select the most appropriate template and create a model that accurately reflects your business’s financial dynamics.
- Build From the Bottom Up
Unlike top-down financial modeling, which starts with broad market assumptions, bottom-up modeling focuses on the specific actions you will take to grow your business. Logan emphasizes, "Bottoms up financial modeling is definitely a must if you're doing the best practices of financial modeling" This approach provides tangible goals and a clearer path to execution.
- Use Real Data
Incorporate real financial data into your model to enhance its accuracy and credibility. "Always start with real data," Logan advises. This includes financial information you've tracked in your financial statements (e.g., income statement, balance sheet, and cash flow statement) or elsewhere. By grounding your financial model in actual data, you make your model more reliable and useful for decision-making.
- Add in Assumptions
Assumptions are a tricky but important part of any financial model. They help you project future performance based on informed estimates. Define assumptions such as growth rates, conversion rates, and pricing within your model, as they provide context and transparency for both you and your stakeholders.
- Make Projections
Use your financial model to make projections about your business’s future performance. These projections should include different scenarios like best case, worst case, and base case. This allows you to plan for various outcomes and ensures that you are prepared for different possibilities.
- Create Multiple Scenarios
Creating multiple scenarios within your financial model is essential for operational planning and addressing investor concerns. In the following video, Logan provides a behind-the-scenes look at Forecastr’s financial model and the multiple scenarios he has created, showcasing the practical application of this approach.
- Polish Your Model
Ensure your financial model is polished and easy to present. This means organizing it well and making sure it’s user-friendly. A well-polished model not only makes a better impression but also facilitates easier understanding and navigation if you share it with an investor.
- Iterate and Adjust Your Model
Regularly update your financial model with new data and insights. Logan elaborates, "Adjust assumptions and projections as your business evolves to ensure the model remains accurate and useful." This iterative process helps you stay on top of your financial planning and quickly respond to changes.
By following these tips, you can create a financial model that not only supports your business operations but also tells a compelling story to potential investors. Whether you have prior experience or not with financial modeling, these insights will help you build your model and make informed decisions for your startup's future.
*Educational Resource Written by Leslie Cook
Why This Matters for PassportOS Users
PassportOS’s content library offers ready-to-use educational resources that support critical areas of startup growth, like financial modeling. OneValley’s PassportOS provides founders, program managers, and community members with expert-led guidance without the need to create course content from scratch.
This content can be accessed directly through the Program and Sub Communities module, enabling organizations to offer learning experiences to their startup communities. By leveraging PassportOS’s content library, you can:
- Deliver ready-made, expert-led course content on essential skills.
- Equip startups with practical guidance from industry experts.
- Reduce the time and effort required to create learning materials for founders and program participants.
The Big Takeaway
Through PassportOS, entrepreneurship support organizations can provide founders with on-demand access to educational resources about financial modeling and other relevant topics.
Discover how PassportOS can empower your community with educational resources and exclusive perks created and curated for founders.
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