Financial Modelling

The practice of building a spreadsheet-based mathematical representation of a business's financial performance, typically projecting revenue, costs, and cash flow across multiple scenarios.

A financial model turns assumptions into numbers and numbers into decisions. It allows founders to stress-test growth plans, identify the key variables that most affect outcomes, and present credible projections to investors.

A founder builds a three-year financial model before approaching investors. She inputs her assumptions about pricing, customer growth rate, churn, and cost increases. The model reveals that her breakeven point is month 18 and that hiring a second team member in month 12 creates a cash flow problem she needs to plan around.