WHY YOUR FINANCIAL MODEL MATTERS: The purpose of a financial model is twofold. First, it clarifies our client's thoughts and expectations regarding key financial metrics, including valuation. Second, it presents the business in the form of financial data that is both cohesive and supportable, in order to present to potential investors and partners.
Another way to look at this is that the financial model shows your capital needs, for your benefit, and the return on investment, for the investor's benefit. At the same time, it provides rigorous analytical insight into the feasibility and profit potential of a startup business, adding clarity to your thoughts before you actually may enter the business.
WHAT DOES A FINANCIAL MODEL CONTAIN?: A financial model usually includes an income statement, balance sheet, and cash flow statement, combined with company-specific analysis and statements. A complete financial model presents this data, and subsets of it, both in detailed chart and summary graphic form. Both types of presentation are necessary, depending on the target audience.
COLLABORATIVE CONSTRUCTION OF FINANCIAL MODELS: Because modeling of startups is heavily dependent on accurate and defensible assumptions, we work with you to determine growth rates, pricing, market reach, cash needs, operating costs, cost of goods sold, and other financial forecast and cash need items, all combining our client's knowledge with our industry-specific research and experience.
FINANCIAL MODEL FLEXIBILITY: The completed financial model is not static; it is a tool that is continuously useful to our clients. Our clients can, without our further assistance, adjust assumptions, modify data inputs, and, most important of all from the investor perspective, run scenarios such as best- and worst-case, rapid growth, and so forth.
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