Starter Financial Model

• All businesses, startups to growth-stage, tech and non-tech.
• Works for companies starting from scratch as well as companies with multiple years of historical operational and financial data that they want to use in reporting and forecasting.
• One-time and recurring transactions, ecommerce, and other businesses with transactional revenues.
• Subscription and SaaS businesses, B2C, B2B, enterprise, freemium, subscription commerce, and many other businesses with recurring usage and revenues.

1. README. Description of model, layout, and how to use it.
2. Outline. Flowchart of how the model works, with a description of every sheet and their goals.
3. Get Started. Model-wide assumptions and settings for acquisition flow, with a full walkthrough of what every calculation and term means. Documentation that details of each sheet and how the inputs and calculations work. Assumptions and calculations are noted and explained throughout the model.
4. Summary. Key operational and financial metrics organized in a clean summary, reported over 3 years, built to be easily customizable for your key metrics and timeframes.
5. Key Reports. Charts and tables of costs, active users (optional), cash on hand, revenue and revenue growth rate, net income and cumulative net income, margins, sources and uses, and more.
6. Costs. Simple yet robust methodology for creating a cost budget for up to 48 months of operations, including a detailed hiring plan, while also automatically handling the accounting treatment of the expenses. Set hiring, salaries, roles, and when to hire, including a method to automatically calculate hiring as the company scales. Flexible inputs to input all costs easily on a month by month basis. Expenses can be allocated to key expense areas and labled for accounting treatment as SG&A, COGS, or CAPEX.
7. Revenues. User acquisition using organic, viral, paid, and business development (partnerships) acquisition methods. Two-step conversion funnel to model user conversion and retention. Revenues forecasts use an elegant structure to handle one-time and recurring transaction businesses and monthly and multi-month contract subscription businesses. Set your conversion rates, order rates, price, churn, costs of goods sold (COGS), discounts, and chargebacks and refunds. Calculates key metrics including customer acquisition cost (CAC) and long-term value (LTV). For more comprehensive revenue forecasting methodologies, including MRR and ACV detail, expansion and contraction revenue, and full SaaS accounting, and more detailed ecommerce forecasts including multiple SKUs, inventories, and more, use the Standard Financial Model.
8. Forecast. Consolidated financial statements, including income statement, balance sheet, and statement of cash flows. Includes a detailed cash flow forecast that automatically forecasts funding requirements based on a simple assumption of how many months expenses to raise money for. Use this sheet for forecasting only, or bring in your historical financials to show either a mix of the past and the future, or to compare budgets to forecasts.
9. Cap Table. (Optional) The cap table in the Starter Model is the Cap Table Model integrated into the cash flows of the business, mapping forecasted expenses and net burn to needed fundraising to estimated funding rounds by size and date. Models equity, convertible note and SAFE financing rounds, mapped to expected financing dates and amounts. Exit waterfall calculates distributions of proceeds to investors in the case of a sale, and calculates returns to all shareholders.
10. Actuals. (Optional) Robust functionality to use Actual financial data in the model, to analyze the forecast compared to the actual results, and to create rolling forecasts that seamlessly combine the projections with the actual results.
11. Actuals + Forecast. (Optional) Combines the Actual data with the Forecas to create rolling forecasts. Simply “roll over” the model by editing one cell each month after you input new Actual data into the Actuals sheet, and the combined forecast updates automatically.
12. External Data. Sheet used for importing financials from Quickbooks, Xero, Freshbooks, and other accounting software.
13. Visible Integration. (Optional) Sheet used for reporting metrics to Visible.
14. Changelog. Details of all edits to the model since release, by version number.

I created the financial models behind Foresight so early-stage entrepreneurs can spend less time on finance and more time on their products. I built the Starter Model because I wanted to build a solid, robust model that helped entrepreneurs forecast their costs and cashflows, and provide a solid base to build their unique business model into the projections, in a package that is easy to use, easy to edit, and inexpensive. I’ve been building and helping entrepreneurs build financial models for startups since 1998. More about my story here.