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Get Started with the Standard Model

The new Standard Model is the base model for all entrepreneurs to use for business planning and fundraising.

The Standard Financial Model is the base model for entrepreneurs of all stages to create five year forecasts, with consolidated financial statements, funding forecasts, cap tables, and returns to investors. Prebuilt to handle many types of businesses, including ecommerce, SaaS, marketplaces, advertising businesses, subscription services, retail, hardware, hardware and subscription services, consulting businesses, apps, and mixtures of different business models.

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

The revenue forecast feeds into the financial core through the Modelhooks 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. Learn more about modularity ›

How it works

Here’s the background on the model:

  1. The Outline sheet explains the different sheets and how the model flows. Each sheet has detailed notes on each input and explaining calculations.
  2. Any number in blue with grey shaded background is an input (i.e. an assumption or data point that can be changed), anything in black is the result of a formula. Change blue at will, change anything in black with caution. More on colors and formatting.
  3. Model-wide Assumptions are on the Get Started - Financial Model sheet, other specific assumptions to edit over time periods are on individual sheets
  4. All assumptions are illustrative ONLY, do not assume they are market data or standard unless specifically noted
  5. This model is built to accommodate some business decisions very flexibly: when the model starts, when the business begins, what type of revenue model the business uses. The revenue models are intended to cover many different business models, but you may need to make changes and tweaks to accurately model your business.
  6. The model is meant to true back to generally accepted accounting principles, but the primary focus is on cash, and so some accounting may be done in simplified ways.
  7. As with all templates, feel free to create your own model from scratch, using this as a guide. The intent is for this model to be easy to plug and play and answer the major business questions, but I would expect you to need to make changes or build custom analyses for your specific business.
  8. Notes on what has changed from previous versions of the template are on the Changelog sheet. V3 starts with a brand-new, rebuilt template that breaks from the v1 and v2 versions originally available from 2011 to mid-2018. This is a completely new Standard Model that combines the goal of the earlier Standard and Starter Models to create a solid, consistent, powerful but easy to use base for building a financial model.
  9. The model is constructed to fit a wide variety of businesses, and therefore, some sections may or may not be relevant to yours. I have grouped together sections on all sheets so that you can review different sections and see all the possibilities, but also easily hide the sections not relevant for you. Simply click on the “+” button on the left-hand side to unhide a section, and click on the “-” button to hide it.
  10. The model is built to be modular to allow you to create your own growth and revenue forecasts however you want. Simply build your own revenue forecasts and link them into the model through the Modelhooks sheet, and that will “integrate” your custom revenue forecasts into the model.
  11. The model starts with a couple sheets hidden - Actuals, Actuals + Forecast, External Data, Valuation - for you to unhide if you wish to use those features. Just command-click (Mac) or control-click (PC) on any sheet tab at the bottom of your Excel, select Unhide from the popup menu, and select the sheet(s) you want to unhide and use.

Get Started

The Standard has two key assumption sheets, each labeled as “Get Started”:

  • Get Started - Financial Model, applying to the financial core detailed above
  • Get Started - Revenue Model, applying only to the Revenue Model sheet

The reason why the assumptions are split onto two sheets is so the revenue model can be stripped out and replaced with minimal impact on the financial core of the model.

Get Started - Financial Model covers a few key assumptions and options:

  • Currency. The model works for any currency, as there are no currency-specific calculations in the model. This field is used throughout the model for information purposes to denote the units used for each row.
  • Timescale. The Standard Financial Model is designed to forecast a up to 61 months on a monthly basis, then aggregating into quarters and years. You can change two dates in the model, the date you want to use to start the Forecast, and the date you want to start the Actuals. If you aren’t using the Actuals for historical financial reporting, just leave the date for actuals to equal the date for forecast. If you are using the Actuals, you can set the start date for Actuals to be different than Forecast, and the Actuals + Forecast sheet will create a forecast starting from the actuals date, and pulling from both the Actuals and the Forecast for the appropriate date ranges.

How to extend the model for more months, quarters, and years ›

How to use historical financials in the Standard Model ›

  • Input structure. The most important inputs are on Get Started - Financial Model, but the more detailed inputs are on the Costs and Revenues sheets. The inputs are structured so that you can input it for the first month, and the model will either carrry forward the same value to all months or create a curve using the first month / starting / last month / min & max input structure. Inputting assumptions using a single input on Get Started, and detailing assumptions on a month-by-month basis, makes it easy to input the starting assumptins and provides a lot of flexibility in how you want to change the inputs over time. You can create spikes, seasonal effects, growth rates, decline rates, in any way you wish, simply by editing the inputs.

Revenue Model

The Standard works for many different types of businesses through its extensive prebuilt revenue model, featuring a two-step conversion funnel that models 1 “average” product, order, customer, subscription, SaaS plan, at each conversion step, and allowing you to model transaction or subscription-based businesses easily just by using a dropdown selection that changes the labels and formulas accordingly.

Learn more about the Revenue Model ›

If you need more detail or more advanced methods for forecasting growth and revenues for specific business types, then it is easy to upgrade to and add in a module. For example, while the Standard handles 1 average “order”, or “plan”, or customer, the SaaS handles by default up to 8 different plans (and can be extended to many more), and the Ecommerce handles by default up to 25 SKUs and two sales channels (and can be extended to many more).

Once you have purchased and downloaded a module, integrating is a simple process:


The model is built to be easy to use to enter expenses. The costs are split up into two main sections:

  • Hiring Plan
  • Operating Expenses

Almost all of the inputs are on the Costs sheet, except for three optional settings on Get Started - Financial Model:

  • Optional: SG&A % of Revenues - The fastest way to forecast your costs. Just set your overall SG&A as a % of revenues, and create the detail later.
  • Optional: Annual salary increase - Structured so that every 12 months after their initial hire salary is increased by this %. Applies to all employees and contractors.
  • Optional: # of Users/Customers/etc. for basis of hiring - Used for the optional plan for hiring based on # of Users/Customers/Etc. This may be 1000s of users (i.e. some enterprise companies), this may be a single client, etc., and it’s based on the metric from the second conversion step (you can modify the formulaas to use any metric in the model as the base for this hiring forecast).

Hiring Plan

The hiring section allows to easily calculate salaries for roles. Use 1 line per employee, and simply type in the monthly salary in the first month when the person is hired. The model will automatically continue that cost going forward. If there are raises or changes in salaries, simply type in the new monthly salary in the appropriate time period. The model can calculate annual salary increases automatically, using the input specified on Get Started - Financial Model. It will increase salaries 12 months from the date of each hire.

In Column D you have a choice in the drop-down: SG&A, COGS, or CAPEX. For most people, the salary expense will be SG&A for accounting purposes. For some roles, perhaps Customer Support, that could be COGS. The reason it is done this way is to allow you to account for the cash expenses easily, and then the model will determine the correct accounting treatment for financial statement purposes.

In Column E You can also break out the hires into Employees and Contractors, so that 1) employee benefits and bonuses are only calculated based on employee salaries, and 2) so that you can account for some contractors in COGS (developers, support, etc., many contracted service providers can be accounted for as COGS). If a person switches from contractor to employee, or vice versa, I usually use two rows for that person, one for when they are an employee, another for when they are a contractor, and simply start and stop the monthly salaries when they switch.

Column F allows you to set the team that the person works in. This allows you to look at summary views of how the salary expenses balances by teams. You can set the categories of teams under all the hiring inputs.

Optional - Forecast Hiring based on # of Customers

There’s an optional method for calculating hires and costs based on the growth of the company, and you can use this in addition to the hiring inputs or to replace it. Here’s the strategy: we know that for some roles the hiring will be dependent on the growh of the company and it’s users / customers / subscribers / clients, etc., and we want to set our hiring plan to be directly tied to that growth.

The inputs allow you to set the new hires needed per role - and you can change it over time - and the monthly salaries to pay that type of role, and then the model will automatically calculate the number of hires of that role over time and the salaries.

The model adds these to the hiring plan in the section above for the overall hires.

Optional - Forecast Hiring based on % of Revenues spend

There’s an optional method to calculate hires and costs, and you can use this in addition to the hiring inputs above or to replace it. Here’s the strategy to this structure: we can decide who we’re going to hire for certain roles, but we may also get stuck sometimes and not know how to hire for future years.

One way to simplify that is to assume that we will spend x% of revenues on people, and assume what the average salary is, and then use that to calculate how many extra people have to be hired. This optional section allows to you set the % of revenues that are spent on people in each of the same teams as specified above. These are “extra” hires, on top of what is named in the hiring plan. The model will figure out how many people have to be hired using your inputs, and then combine the calcualted extra hires with the people already named. The model also allows you to make a simple assumption on how much of your revenue you will spend on employee salaries, and then you can assume an average salary and the model will automatically calculate the headcount.

If you use both the manual input and the salaries as a % of revenue assumption, the model will calculate the costs both ways, then take the maximum.

Operating Expenses

Simply enter in the list of expenses you want to forecast in the rows, select whether it is an SG&A expense (i.e. “running the business”) or COGS expense (i.e. “cost of providing the goods that earn revenue”) or CAPEX expense (i.e. “investing in building the business”, an expense type that is subject to different accounting treatment and has specific allowances in how to use it.

More at The Essentials of Finance and Accounting for Financial Modeling ›

The model uses those selections to handle the accounting, but you can simply enter in the expenses on a month by month basis. Pay attention to which rows are labeled as inputs and which ones are not, and only edit the rows that are labeled as inputs. If you need to add in more lines, simply insert a row, copy the formulas from an adjacent row, and all the summaries and calculations will work.

You can define multiple “categories” in the summary section, which is used to summarize the operating costs in some reporting functions in the model. It’s important to use a category for Acquisition Costs so that CAC (Customer Acquisition Cost) can be acccounted correctly: leave that row unchanged, but feel free to edit the others to fit your business.

Acquisition Costs

This section aggregates acquisition-related expenses entered in the expenses section, and then allows you to allocate a percentage of a couple types of salaries (perhaps executives or sales people) to count towards acquisition costs. This is used as the acquisition costs to calculate the cost per acquisition for each of the metrics reported in the conversion funnel. If you need to change the calculations to account for different costs for different conversion steps, it’s easy to do by duplicating and editing this section and recalulating the metrics on Modelhooks or the Revenue Model sheet using the appropriate acquisition costs.


The forecast sheet contains the consoldiated financial statements - income statement, balance sheet, and statement of cash flows.

Learn more about consolidated financial statements ›

The only inputs on this sheet are on the detailed cash budget at the top of the sheet. This is used to break down the cash flows and help forecast funding needs.

Essentially, the model analyzes the cash flow and will not let the company go to negative cash on hand (i.e. bankruptcy), and when it needs to raise money to fund operations, it will raise money. The model by default assumes that will be equity financing, but if that is funded through debt (i.e. a revolving bank loan, for example), that can be selected on Get Started - Financial Model.

The input on Get Started - Financial Model allows you to input the number of months of future expected expenses you want to cover in a funding round, and whenever the company runs a negative cash balance in a month, the model will raise funding based on that number of months of future expected cash needs. You can set what types of cash needs are used in that calculation on funding section of the cash budget.

The raises are shown on the Cash Budget section on the Forecast tab, and the rounds are shown below that. The rounds are automatically applied into the cap table and the model uses the % of company sold assumption to do a basic valuation for each round.

You can also manually override the automatically calculated raise amount with your own estimate: just type that in to the manual input sections on the cash budget. If you want to override the basic functionality of raising external funding, type zeros into the manual override line for all months, and the model will not raise any external funding.


This is a key to building in the modular capability of the model, making it easy to build any new revenue model or additional revenue streams and feed them into the model.

Learn more about Modelhooks ›

Summary and Key Reports

The Key Reports sheet is to provide detailed looks into key calculations and numbers in the model, and to look at them using charts. It is intended to be a “presentation” sheet rather than a “calculation” sheet, meaning it focuses on displaying information rather than creating forecasts. It summarizes information that is calculated elsewhere in the model.

It represents a starting point, a first guess, on the best way to summarize your business. Please make edits to make the summary best for you. Feel free to choose different time periods, or hide lines, or create summaries that best fit what you are trying to do. You will want to edit this sheet and the summaries for it to be best formatted for you and to optimize the look and feel for your business and projections.

On Get Started - Financial, there are two relevant inputs:

  • The Summary is coded to the first year of either the Forecast or the Actuals + Forecast, select which one you want to use in the dropdown
  • The Key Reports can be edited to start from a different time period, if desired.


The Funnel sheet is a quick sheet to help visualize your conversion funnel. It takes the operational metrics as you’ve defined them in Modelhooks and visually compares the size of each conversion step. It can fail in some situations based on the balance of the numbers; feel free to delete, hide, or edit if you do not find it useful for your business.

Funnel graph


Here’s how scenarios work with the input structure. By default, all inputs are on the relevant sheets - Get Started Financial Model and Get Started Revenue Model, with some ability to override things on the Revenue Model, Forecast, and Cap Table sheets.

You can continue to use the inputs as structured, but here on the scenarios sheet you can build in a place to analyze a few inputs that you want to vary to see how they affect the overall business. This is built to be a sheet for you to store your scenarios and any results.

The process to use scenarios involves first laying out the options, then linking in to the appropriate places in the model:

  • Input the variable names and amounts to define the scenarios you wish to evaluate
  • Link the variables into the model in the places you want them.
  • Then, select from the dropdown in cell C7 to choose the scenario you want to use in the model, and the entire model - Summary, Key Reports, etc. - will change based on the scenario you created.
  • You can add in as many inputs or scenarios as you like.


Scenarios are a bit manual to use because you need to type in the variables you want and link them to the appropriate places. Feel free to delete or hide if you do not plan on using it, it is safe to delete and by default is not linked into the rest of the model.

Actuals, Actuals + Forecast

Actuals and Actuals + Forecast are detailed at How to use historical financials in the Standard Model ›


Valuation is detailed in a separate post, Valuation ›

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