BlogCore Concepts

Bring Your Own Model

Apr 12, 2018 · Foresight's Bring Your Own Model (BYOM) functionality allows you to build or bring your own growth and revenue model and easily use it to replace the default growth and revenue model in Foresight's Standard Model.

Taylor Davidson

CEO / Founder

a painting in the style of edward hopper person creating a clean financial model on a computer sitting on a window sill overlooking a city skyline in the morning, by DALL-E 2

Bring Your Own Model is a functionality that turns Foresight's Standard Model into a modular model, allowing you to bring or build your own revenue and expense forecasts into the Standard Model with a minimum of integration effort.

How does it work?

The Standard Model contains many sheets, but is essentially separated into two integrated components:

  • The financial core, consisting of the consolidated financial statements, operating costs, cash forecast, cap table, valuation, actuals reporting, summary, key reports, and funnel reporting
  • The revenue forecast, consisting of the revenue model Get Started sheet and the revenue calculations on the Forecast sheet

The revenue forecast feeds into the financial core through the Forecast sheet, which exposes the key integration points into the financial core of the model and allows you to feed any revenue forecast into the financial model without having to figure out all the integration points. Any revenue or expense items can be linked into the Revenues and Expenses section on Forecast.

Any operational metrics (clients, customers, subscribers, etc.) can also be linked into the operating metrics on the Forecast sheet, as well as any actual historical financials you may want to use. This process turns the typically hours-long process of customizing a model into minutes.

What does this mean?

Let's say you already have a revenue forecast you like, whether you built it or you're using a non-Foresight template. And let's say you like the revenue forecast, but don't think it does cash forecasting, or funding forecasts, or the cap table, or LTV, CAC, or other metrics reporting as well as Foresight. That's fine: simply duplicate the revenue forecast sheets from the non-Foresight model into the Standard Model, use your existing model for the revenue forecast, and link into the financial core through the Forecast sheet. Or build your own custom revenue forecast, by creating a brand new sheet or inserting rows at the top of Forecast, your choice, and link the revenues and necessary metrics into the Forecast sheet. You can still fully use all the financial and reporting components of the Standard Model, but you don't have to use my revenue forecast.

Here's a practical example. Say you have four revenue streams that are all sold to different types of customers with different pricing mechanisms. The default growth and revenue structure in the Standard Model won't be a great solution for modeling that, but you can delete the revenue model sheet in the Standard Model, build your own revenue forecast in a new, blank sheet to model your growth and revenues exactly how you want, and feed them into the model through the Forecast sheet.

All that is required for this functionality to work is to link your revenues into a line on the Forecast sheet and select a revenue category in the category dropdown. Optionally, you can link into new lines:

  • Billings, if the billings schedule does not equal recognized revenue every month
  • Acquisition costs, if modeled in your revenue model, including any sales staff, commissions, or growth-related expenses part of your forecast
  • Customer metrics, if you want to use customer, client, or user-related metrics in any drivers to calculate expenses or other revenue streams directly in the Forecast sheet.

How this solves a common problem with templates

The problem with financial model templates has always been that they do some things you need, but not everything, and it can be incredibly hard to modify them to do what you want. One of the reasons for that is because modeling the revenues for a business - the sales methodologies, the growth engine, what is sold and how it's sold, etc. - can be incredibly specific to each business, and it's very hard to build a model that can work for a wide variety of businesses.

That's why I've worked to build a modular model - a standardized financial core with an easy methodology to integrate with any revenue forecast - to help solve the problem with financial model templates, and to make it as easy as possible for you to use a template and minimize the amount of time you have to spend to make it work for you.

This feature is a default feature in the Standard Model. Learn more about the Standard Financial Model here ›

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