Foresight's financial models handle a wide variety of business types, the hardest part in using a spreadsheet like this is the adoption curve of understanding how things flow, what to pay attention to, and how to get started.
Start with the Summary and Key Reports
When I look at a finished model, I always start with the Summary and Key Reports sheets, as it is the quickest way to understand the forecast. Visual charts and big picture summaries are great to communicate the big insights from the model. I start by looking at the slope of the revenue forecast - to get a sense of scale, then look at the margins (COGS, Gross Margin, SG&A) to see how they are changing as a % of revenue, trying to understand if the changes in costs makes sense given the business type. Then I look at Net Income to get an understanding of how they are thinking about profitability and scale, and to understand if that makes sense given the funding they are looking for, if that's a part of the growth strategy.
Then I review the Key Reports, focusing first on the chart of burn and runway to see burn per month, when that swings from negative to positive, and cash position over time, and whether that makes sense. After that, I look at the operating expenses charts to understand the composition of expenses and how they change as a % of revenue, and then the sources and uses. What I'm trying to understand is how they are planning for costs, and if that reflects what I know about the business and how they are looking to grow.
Then I scan through the rest of the Key Reports charts for any insights about the business. If applicable, the cohorts chart is really insightful because it gives me a sense of growth, churn, repeat business, and performance over time.
Review key management analyses
Then I'll look at the Breakdown sheet to see if the business has been broken down into different business lines or segments, to understand any insights that they used this sheet to communicate. Some people use this to breakdown a subscription and ecommerce business, or a software and hardware business, into their relevant business lines down to a gross margin or a contribution margin level (it's not necessary to allocate all expenses, and usually not insightful for understanding the economics of the business lines.)
Review assumptions and key details
Then I'll dig into Get Started, Forecast, and Statements to see the details. Usually all the key questions are answered by the first sheets, and digging into those is about understanding and verifying the inputs and whether they make sense.
When using the model from start, though, we start with the Get Started sheet. This sheet has been created to capture all the primary inputs for the business - many can be modified on a specific, month-to-month basis or shaped with manual overrides in each month - to create the base forecast. The ]Forecast, Hooks or Modelhooks sheet is used to help create the basic setup for operating metrics, and then to making building themes easier - but you probably don't need to worry about that to start.
So I go down the Get Started sheet, covering the basic setup - company date, set the dates for the forecast, cash on hand, and then go into forecasting revenues. The model structure in the Standard Model takes the approach of forecasting revenues by forecasting the operations of the business, and so revenues are the result in growth, adoption, conversion, and retention, then revenues.
Review and understand growth and revenues mechanics
The first set of important assumptions are the inputs for growth; this sets what you are "acquiring", and it's tracked in terms of new per period. This could be website sessions, leads, email subscribers, anything that's an important growth metric for forecasting revenues.
From there, the model goes through adoption and conversion, then retention and churn, and then revenues and cost of sales. Once you have those settings done, you should start to see revenues show up on the Summary and Forecast sheets.
How I analyze the revenues and costs of sales will depend highly on the business model of the company. The specifics of the revenues will be on the Revenues or Forecast sheet, or perhaps a custom sheet built specifically for the business, and what I will try to understand is whether it's a transaction or recurring revenue stream, how many revenue streams there are, how revenues tie to the operational growth, whether repeat usage, retention, and churn are factored into the forecast, and whether there appears to be any major gaps in thinking. After I review gross margins and the sources of cost of sales, then I may review the inventory calculations, if applicable, to see if inventory will have a major impact on cash flows. For recurring businesses, I'll review the marginal recurring revenue (MRR) or annual recurring revenue (ARR) build to see how the components change over time - new, renewed, churned, contraction, expansion, etc. - and to see the implications of that with the company's business model.
Review expenses
Once that is set, I go to expenses. The expenses are setup on the Forecast sheet, and it takes a second to understand the structure and the setup. Each row is an expense, and this can be as detailed as you want. You could create a row for total salaries, or a department, or a type of role, or a specific individual, and then use the category dropdowns to set the accounting treatment, the expense category (for management analysis), and the business category (used on the Breakdown sheet). Then you have a couple starter parameters for forecasting the expenses, from setting the initial amount, the first date, and optionally a growth rate, expressed as a % delta from the growth in revenues. Of course, you can manually overwrite any of the expenses in those cells simply by inputting what you want in the appropriate months.
When I analyze the expenses, I'll start by looking at the expense categories, seeing what a user has deemed important to roll up or highlight in their reporting, and I'll look to see how the components change over time, both in an absolute and relative (percentage of revenues) sense. Big numbers then call for greater attention to the specific expenses in each section, and I'll look into more details in the expenses section to see what is driving the big numbers.
If I have an existing business, I'll then setup the opening balance sheet on the Statements sheet.
Review cash, fundraising, and overall topline growth and margins
After that, I go back to Get Started and setup the fundraising inputs, and adjust any of the balance sheet or financing assumptions as needed (debt, equity, working capital line, etc.), and review the cash position over time on the balance sheet, and the components of the statement of cash flows to see if there are any significant items that deserve attention.
Then, I go to the Summary and Key Reports, and start iterating to create the shape of a model I want; by "shape" I am referring to the overall trends and margins of the business in the model.