Contact and FAQ
Are financial models useless?
I’m glad you asked.
Ask any entrepreneur about what they’re building and the problems they are solving, and their eyes light up. But ask any entrepreneur about their financial model, and the energy disappears.
Trust me, I talk to entrepreneurs every day, and I’ve been helping entrepreneurs build financial models for about 15 years, and I’ve seen the reaction umpteen times. But building financial models can still be valuable, if you remember one thing: the model doesn’t matter, the thought process does. Overly complex financial models are a waste of time without a solid understanding of the basic inputs and outputs of your business. That’s why I’ve worked to help entrepreneurs think about finance and build financial models the right way.
In March 2012, I ran a survey to understand what entrepreneurs thought about financial models, and one recurring thought stuck out: that financial models are largely BS.
A financial model is just a fancy equation with a bunch of input variables. If the input variables are mistaken, it doesn’t matter how good the equation is, the whole thing is useless – or even worse than useless, as it breeds false confidence.
True, to a degree. If your inputs are mistaken or a poor approximation of reality, then the results (revenue, net income) will be highly inaccurate. But the results aren’t the important parts to a financial model. Nobody cares about your hockey-stick growth projections, but people do care about how you think you’re going to create that hockey-stick growth. The results don’t matter, but the thought process is critically important. Instead of worrying about building accurate financial projections, spend your energy building a model that helps you tell the story behind your business:
In the end, the most important thing isn’t a really detailed financial model – it’s having a grasp of what the major influencing factors are on your model (hint: sales and growth) and then getting some kind of data that helps you accurately predict these variables.
Everything I do with financial models is aimed at looking past the model and diving deep into the business. The models are tools for us to use in decisions, and it’s up to us to use our tools appropriately.
What’s the key to building good financial models?
Remember that first and foremost, a model is a tool to help you understand a business. Creating a financial model forces an entrepreneur to outline very specifically how a business works: how a company creates their products, how users and customers find and use their products and how those processes create revenues and costs. The result, a set of operational metrics, financial statements and the “equation of the business”, creates a set of views of the business’s potential future. While any one view of a speculative future is inevitably wrong, digging deeper, analyzing the key drivers and testing a range of assumptions can help an entrepreneur build the necessary insights into making crucial product, marketing, organizational and strategy decisions.
I care about financial modeling because I believe that financial models are one key way for us to make “strategy” actionable. Financial models can help even the earliest entrepreneurs with business decisions. We can build “minimum viable models” the same way we build “minimum viable products”. Financial model literacy can and should be a part of startup culture but first we have to rethink how financial models are built. Financial models can help entrepreneurs make critical business decisions.
That’s why I built these templates.
Who is behind Foresight?
That’s me, Taylor Davidson. I’ve helped entrepreneurs build innovative ideas into real companies, working with consumer and enterprise businesses in digital media, imagery, mobile, data, communications, and financial services. I have invested and advised a number of early-stage startups throughout my career as a venture capitalist, consultant, advisor, and mentor, and I’ve worked with thousands of businesses through Foresight, my models, and my classes about financial modeling.
Who uses Foresight?
Through the models and my advisory work, I work with a mixture of pre-seed, seed, and A-round venture funded businesses, primarily in the USA but also internationally. I do not publicly share my client list (I can intro you to referrals) but many entrepreneurs have shared their stories of how they used Foresight’s models to improve their business.
Why is this a spreadsheet, and not a web app?
Building financial models that reflect real business decisions is an interesting endeavour: as much as we try to standardize the approaches, there are always little tweaks or unique ways to look at specific parts of the business or pressing business decisions that require custom analyses. A degree of human customization to help people make important decisions is a necessity in almost all real businesses, and that requires custom models using available tools.
That’s why I belive that spreadsheet templates are powerful, but only to a point. Today, Excel and other spreadsheet programs are the best tools we have to create those analyses. I do think there is a scope for financial modeling web applications to help with at least 80% of business decisions, but until that changes, I’ll be continuing to think hard about the best ways to use spreadsheet templates to help people make financially-oriented business decisions.
Can a template build a complete model for me?
Continuing on that point, no, I do not think a template can deliver all of the specific analyses necessary for you to build a solid financial model. It can help you build a minimum viable model, but it can’t possibly deal with all of your specific needs. I advocate using a template to get to an 80% solution easy and quickly, but then you’ll have to do some customization to get it to your complete need.
If you have any questions on how to use the models, email me and I’ll help you through how to customize them for your use, and if you need more help, I provide customization through my advisory services, where my broader team and I work with you to deliver the exact solution you need.
I’m interested in a model but I’m not sure if it will solve what I need. What should I do?
I’m happy to chat and see how I can help. Send me an email to firstname.lastname@example.org and tell me what business problems you’re trying to solve, and we’ll figure out if one of the models can help you. Purchases of the financial models cannot be refunded, so if you have questions, email me first, I’m happy to help.
I run an accelerator / incubator / university and I’d love to get more of our entrepreneurs using your financial models, how do I do that?
I’d love to chat. I’ve worked with multiple accelerators in helping their companies with financial models, and I’d love to work with more. Drop me a line at email@example.com.
On that note, curious what people are buying right now? New sales are tweeted out to @foresighthq, so check the Twitter feed to see what people are buying.
What’s the email course about?
Ah, the free email course. I’ve taught classes about financial modeling since 2010, starting first with in-person classes through General Assembly in NYC and Berlin, and then through Skillshare in NYC, New Orleans, LA and other cities, and then built a couple online courses through Skillshare. For me, the email course is a way to reach people in an easy, accessible way to give a first intro about what financial models are about.
If you complete the course and want to learn more, drop me a line and we can chat about the next things for you to learn.
Why do you do advisory work and product work?
They each inform the other. By working with clients I’m able to listen to their key needs and create custom solutions and answers that inform the templates I build. No data or metrics or structures are shared between clients or introduced into the templates, but thinking about the issues and opportunities in building unique, custom solutions and scalable, easy-to-use templates helps me build the right solutions for all.
What do you use to make this site?
Some of the background images are mine (more on Instagram), and some of them are from Unsplash, a great resource for creative, quality, and free imagery. The icons are from Entypo. This site runs with Statamic, and is custom designed and developed by me.
How can I contact you?
If you have a question that requires an immediate response, call or text +1 646 770 0052
Otherwise, send me an email to firstname.lastname@example.org.