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Get Started with the Starter Model

The new Starter Model is a re-imagined structure to provide the "Minimum Viable Model" for an entrepreneur to use for business planning and fundraising.

The Starter Financial Model is built to be the “Minimum Viable Model”, the baseline starting financial model for an early-stage entrepreneur to forecast their costs, runway, and financing needs, with enough reports and structure to use for Seed-round financings. It is an upgrade to the Runway and Cash Budget Tool, in that has the same:

  • Simple structure for forecasting revenues
  • Summaries and key reports to help you understand the key insights from your model quickly

and adds in:

  • A more robust structure for forecasting costs, inventory (if applicable), burn, funding needs, and financing rounds (debt and equity)
  • Consolidated financial statements: income statement, balance sheet, and statement of cash flows

Compared to the Standard Model, the Starter has a similar (if a bit simpler) financial core and a much simpler revenue structure. On the financial core, the Starter model does not handle actuals reporting, actuals v. forecasts, valuation, or include a cap table (which can be downloaded separately for free - Cap Table Model - and integrated into the Starter Model if desired). On the revenue structure, this model does not include the prebuilt default revenue model used in the Standard Model, but simply provides you the space to type in your revenues or build in your own logic to forecasting revenues, and automatically carries those revenues through the financial statements.

That said, this model has a lot of prebuilt structure around capital expenditures and depreciation, expense accounting, inventory ordering forecasting, cashflow forecasting, debt repayment and interest expense, and a number of other detailed analyses that are all prebuilt to make the accounting and financial treatment of your expense forecasting easier. This focus on costs makes it a solid choice for an early-stage entrepreneur that has less visibility into their revenues or does not need to build a detailed revenue forecast yet.

How it works

Here’s the background on the model:

  1. The Outline sheet explains the different sheets and how the model flows, in how data is passed between different sheets. 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. As all formulas and cells are unlocked, the formatting provides on guide on what I’ve intended for you to change: change blue at will, change anything in black with caution. More about Foresight formatting here ›
  3. Model-wide Assumptions are on the “Get Started” sheet, other specific assumptions to edit over time periods are on individual sheets.
  4. Assumptions are illustrative, unless they are noted to be industry standards you should use.
  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.
  6. The model is built to generally accepted accounting principles.
  7. As with all templates, you may need to edit the model to fit your specific business. The documentation will help you understand if and how to make edits with the models. Feel free to use this model as a guide for your own model, if you desire. The intent is for this model to be easy to plug and play and answer the major business questions, but I also understand if you want to build your own and use this for inspiration.
  8. 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.
  9. Notes on what’s changed in versions of the template are on the Changelog sheet.

The core of the model consist of five sheets:

Get Started

The primary input sheet for model-wide assumptions.

  • What is your currency? - Model works for any currency, as there are no currency-specific calculations in the model. This label is used in some presentation areas.
  • What is the first date you want to forecast? - First month in the model; if this model is entirely a forecast of the future, input the first month you want to forecast from.
  • What is your Beginning Cash Balance? - How much cash do you start with entering into the first month? Exclude any external financing you will get, that is detailed on Forecast sheet.
  • Depreciation, straight line for n months - The model assumes straight-line depreciation for all capital expenditures, all depreciated by the # of months in this input. If you need different depreciation schedules for different assets, it’s not difficult to build that in.
  • Days Accounts Receivable - days. The model allows you to assume the Days Accounts Receivable so that you can collect the cash later than recognizing the revenenues, if applicable for your business.
  • Debt Financing, Loan Period - if applicable, the default # of months that any debt (loans) will be repaid over. This can be altered on a per-loan basis on the Forecast sheet
  • Debt Financing, Annual Interest Rate - if applicable, the default annual interest rate for any debt financing. This can be altered on a per-loan basis on the Forecast sheet
  • Inventory Turnover Ratio - if applicable, automatically calculated using simple assumption of target Inventory Turnover Ratio. For more detailed inventory forecasting methods, consider the Standard Financial Model. Input here is for targeted # of inventory turns per year. This can be used in addition to the safety stock and minimum order quantity assumptions, or on it’s own.
  • Safety Stock - if applicable, you can input a % of current month’s COGS that are kept in inventory at end of that month, as “safety stock”. Safety stock is also called reserve inventory, and it helps create a buffer between forecasted and actual demand. This assumption can be used in addition to the inventory turnover ratio and minimum order quantity if desired, or on it’s own.
  • Minimum Order Quantity - if applicable, the dollar value of the minimum order quantity. For example, if the inventory calcs say you need to purchase $500 of inventory, and your minimum order from your supplier is $1500, the model will buy $1500 of inventory and then run it down until next time it needs inventory.
  • Cost of Goods Sold - if applicable, cost of goods sold, as % of revenue. This will take the expenses on inventory and recategorize them as COGS, and then do proper inventory accounting, if this is used. Thus this is really only for product businesses that turn supplies and materials into finished products to sell. This is also in addition to any costs tagged as COGS on the expenses section. If you do not use this, the model will only use the expenses that are tagged as COGS to account for them as COGS. Despite what the description says above, this simplifies the process of accounting for cost of sales in your forecast.


The core of the model, containing the inputs for the revenues and costs, and creating a 47 month forecast, summed into quarters and years.

  • The model is a 72 month forecast, that starts with the date set for the first month set on the Get Started sheet. The reason for 72 months is that it provides enough space to create a forecast for a partial first year (i.e. a forecast that details less than 12 months) and five full years. The model’s summaries and reports generally run through three years, but you can change the reports to show the periods you want to show. If you want to add on more months, then follow the instructions for how to extend the timescale on the models.
  • Revenues. The revenue lines are completely open for you to simply type in forecasted revenues, or to create your own logic and calculations to forecast revenues, and then link them into thees revenues lines. You can create more lines for different revenue streams by adding in rows, and making sure the Total line still sums the rows you added. 1
  • Expenses. The expenses lines have a couple example titles, but you can set the names for the expenses however you want. In column D you can choose the accounting treatment for the expense, selecting Cost of Goods Sold (COGS) and Selling, General and Administrative (SG&A), Capital Expenditures (CAPEX), Interest, Depreciation and Amortization, or Inventory Purchases. In Column E you can set a category for the expense, and you can rename those categories in the section directly under the Expenses line. You can add as many rows as you wish to add in more expenses, just make sure the Total Operating Expenses line sums the rows you added.
  • Cash. The cash section takes the beginning cash balance and looks at the change in cash during the period to calculate the ending cash balance. Note that the model can be used for either cash or accrual accounting methods, noting that if you want to use accrual methods you might need to edit this cash section depending on the full accounting impact of the revenues and costs you enter.
  • Inventory. This optional section takes your revenue forecast and cost of sales input, as well as any inventory purchases tagged in the expenses entered above, and using the inputs around inventory turnover and minimum order quantity, calculates necessary inventory purchases - how much and when - in order to fulfill on the forecasted revenues.
  • Cash Detail. On this sheet you can also input external funding - equity, debt, loans, grants - to model the impact of external funding on cash balances. If debt, the model will automatically calculate out principal payments and interest expense and roll it through the financial statements.
  • CAC and LTV: This optional section helps you calculate your CAC (customer acquisition cost per customer) and LTV (lifetime value of a customer). The 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. Since the model by default doesn’t calculate customers, you’ll have to add in a couple lines to calculate CAC per customer if you model that. And since no revenue-generating operational metrics are created by default, you’ll have to calculate the LTV separately.


A core feature of the Starter Model are the consolidated financial statements, consisting of an income statement, balance sheet, and statement of cash flows. For full details on how I construt financial statements, see Explaining Financial Statements ›

Summary and Key Reports

While simple, these are also the first sheets I review when I look at the model. A simple income statement and statement of cash flows tells a lot about a business, and the two charts on the Summary sheet provide a quick summary of revenues and cash. The Key Reports goes into more detail with a graph of cash burn and cash on hand, a summary of the operating expense categories, and a sources and uses.

  1. This may not be obvious, but if you are looking for revenue logic, you can also explore the Free Tools to see if one of the revenue methodologies there can help you forecast revenues. And of course, it’s easy to pull one of the free tools into this model and link the revenues calculated in the other free tool into the Forecast sheet of the Runway and Cash budget. Questions, contact me ›