CEO and Founder of Kruze Consulting
I’m a CPA and interim CFO for 200+ startups and I’ve helped many of my companies build financial models that have gotten the thumbs up from top VC firms and the pickiest of investors/board members.
While you may be able to start with a template, keep in mind that your business is unique, and therefore your model should be as well. Here are some common points that you’ll want to include in your financial model:
3 Years of Projections. Occasionally investors will ask for more/less, but start with 3 years.
Your KPI’s should be your Drivers. Every company has a dashboard of metrics that they track growth and success by. A few examples include number of users, customers, margin, customer acquisition cost, Twitter followers, website traffic, etc. Look to the past and show that there is a correlation between X (could be # of Sales Reps) and Y (could be your revenue), then use this as a driver towards the future projections.
Churn. Customers will leave. Account for this.
Don’t show an investor a financial model that shows smooth growth “up and to the right.” No company’s growth is without bumps. These models take a lot of time to build and are highly personalized, so it really is best to consult with a professional. If you’re planning on raising $3M+ you should come prepared with a well thought out financial model.
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