Ensuring to have a healthy business is to have a working financial plan that will help with managing the business to make the right strategic financial decisions. Especially for startup businesses, creating a financial plan is a critical factor for the business’ survival against countless competitors and other risks that one might encounter especially for startups that’s new to the industry.
What is Financial Modeling? Financial modeling is a tool, used to create a representation of a company’s financial status. This is commonly in the form of an Excel spreadsheet, created to show a company’s earnings and expenses and can be used to predict and measure the impact of future events or decisions. This is used by many business owners, big or small, to help them decide on many financial situations.
The best way to present the financial plan is to build a financial model for a startup that will help answer questions that you need an answer to ensure your business’ financial feasibility and profitability. This is why financial modeling skills become handy for entrepreneurs.
Importance of Financial Modeling for Startups
Creating Financial Models even for a business startup is very important to build a strong foundation regarding the financial identity of the company. It’s much important for reasons such as decision making related to mergers and acquisition, raising capital and additional funds, financial management, and others. Financial model for startup is the core element to take major business and financial decisions and the most important tools for planning and execution of business decisions for better results.
Here are some of the most important reason as to why you should prepare Financial Models for your business:
- Financial Model for Startup is created as an attractive financial representation of the company’s monetary situation. Basically, if you want to attract potential investors, you need to produce the best possible version of a financial model having excellent figures and values to show them.
- The main purpose of Financial Model for Startup is for future planning related to the company’s finances. It allows the creation of better financial decisions within the company.
- Financial Models play an important role in Capital Budgeting. It mainly helps to determine the capital structure or cost of capital, as well as to create an analysis for resource allotment and the like. For this reason, it offers a detailed review of the debt/equity system along with the returns expected by the investors.
- Another use of financial model for small businesses is to optimize the financial performance of the company. The most obvious use of financial modeling is to optimize the day to day operations of a firm. Companies use these models to determine how they can most profitably invest their resources and capital.
- For people working with investors, mergers, acquisitions, company executives, and others, financial models is of very great importance and document to prepare beforehand. The key explanation of why it is so important is that millions of dollars are on line with these big business transactions, and most of the decision-making comes down to the financial models.
- Companies extending credit in order to increase sales bear a lot of risks if not properly assessed. Hence, they need to determine first if the third-party is worth lending credit or not through a financial model analysis.
Not all startup businesses have the financing so, creating a financial model is the best tool to attract potential investors. Therefore, financial modeling for startups & small businesses is very important as well as a great factor to raise financing.
10 Elements of a Good Financial Model for Startups
For startups, the following elements are what we recommend for you to have. There are certain components that complete a startup financial model for small businesses which is done accordingly in a sequence to avoid going back and forth through the sheets.
- Sales forecast – create a sales projection over the course period (whether for short-term or long-term planning).
- Expenses Budget – create an expense budget plan as you need to have a better understanding of the cost you will expend to make the sales forecast plausible and feasible.
- Cash Flow Planning – develop a cash flow statement to track the flow of cash in and cash out of your business operations, partly basing it off your sales forecasts, balance sheet, and other assumptions.
- Income Projections – or the so-called revenue forecast for the upcoming years by using the sales forecast, expense forecast, and the cash flow projection.
- Balance Sheet Projection – deal with assets and liabilities that weren’t included in your income projection to project the net worth of your business at the end of the fiscal year, especially for startups.
- Breakeven Analysis – conduct a breakeven analysis after mapping out the whole projections, this is to assess if the business’s expenses match the sales or service volume. The analysis is conducted to measure when the business will reach the break-even point which is an important key for potential investors to refer to if the business is financially feasible and a good investment.
- Calculation of Funding Required – Preparing and showing the company’s required amount of funding is much helpful if the management seeks to present this to prospective investors or any financial lending agencies.
- IRR Calculation – Businesses use this to calculate which discount rate compares the initial cost of the capital expenditure to the present value of expected after-tax cash flows. That is why IRR is one central component of capital budgeting and corporate finance.
- Exit Scenario and Multiple – Also, we should not forget to prepare an Entry and Exit Valuation. We need to carefully calculate and present an attractive Exit Scenario and Multiple to show prospective investors and compel them to invest their money on you.
- Shareholder Structure – Lastly, we also need to show the existing Shareholder Structure, along with the percentage of equity and financing. This is very valuable data for prospective investors to assess the percentage share of the company’s equity.
Altogether, it completes a basic startup financial plan model. The process may look simple and easy, but of course, the process is more than it seems. A lot of time is needed to be set aside just to build a financial model for your startup business. Not to mention that you at least need to have an acceptable amount of industry know-how to make the financial model reliable and work as it should be. To help you with how to build a complete model, you can read it here: Building a Financial Model.
General Tips in Creating Financial Models
Financial Modeling is quite a complicated process depending on the goal you wanted to achieve, or question you want to answer. One cannot simply map out the precise steps needed, therefore we list down here our tips and suggestions on what to add on your Financial Models.
Knowing the general steps can be beneficial when you try to create a financial model for startup. So here are some general tips in Financial Models creation:
- Gather Historical Data – If the business that prepares the financial model has been in operation for some time, beginning with its past financial statements would be a wise decision. It has to be noted, however, that past patterns only give assumptions and may vary in the future. In certain situations, financial models are built for start-ups where no prior data are available.
- Forecast Scenarios and Understand Parameters – A financial model is intended to reliably predict the revenues and expenditures that could arise in the future. These numbers of revenues and expenditures are simply the product of an interaction between multiple parameters that underlie them. Consequently, if an attempt is made to forecast the numbers without knowing the parameters involved, the predictions would probably not be very accurate.
- Determine Financial Situation – A declaration of profit and loss gives away a clear representation of the expenses and revenue performance. For example, when output volume rises or decreases, not all expenditures behave in the same way. It is important to understand this situation by providing accurate data in the financial model. This will ensure the model produces accurate results when used to know the anticipated profitability at various levels of output.
- Secure Logical and Accurate Values – One must always make sure their model is rational. Therefore it is important to define and model the inter-relationships between different parameters. Further steps are required to ensure the model’s logical accuracy. It is for this reason that all defined parameters need to be given and laid down correctly.
- Result Analysis – Finally, the financial model should be constructed in such a way as not to deliver only one outcome. The truth is that the future is highly unpredictable, and the decision-makers would be better off if several options were presented.
The bottom line is that financial modeling is a very challenging task. These steps provide only a few guidelines to help you but still need to do a lot of researching to build an excellent financial model. Also, there are way more steps that need to be undertaken on the basis of the particular financial model being developed.
Startup Business Models – Examples
As you can see, you can’t just blindly build a financial model for small businesses. Financial modeling for startups & small businesses can also vary depending on what type of startup business model you are referring to. The following are startup business model examples that you can use as a reference in deciding what kind of startup business you want to start in the future.
- Subscription-based business model – the customers will need to pay a subscription fee to gain access to the product or services offered. It used to be a business model for magazines and newspapers, but nowadays, it is used by many businesses and websites, providing services or products that require the customer to pay in a subscription basis.
- Product-based business model – every store or shop selling physical products, such as clothing, jewelry, cars, etc. are all businesses that apply this kind of business model. It is considered as the most commonly used business model for startups since it is very straightforward and an easy choice to start a business with.
- Service-based business models – this business model works the same as the Product-based business model except, instead of selling physical products, offering services that consumers need, is the main agenda. The best examples that use this kind of business model are hotels, restaurants, consulting firms, etc.
- Retailing – considered one of the most common business models that entrepreneurs often start with. It is a business model where a retailer purchases the products from a distributor or wholesaler and sometimes directly from the manufacturers, then proceed to sell the said products to the market.
- Manufacturing – a common business model where it focuses on taking raw materials and produce products out of it. This can also apply to companies that assemble finished products from premade parts. The products are then distributed to either the wholesalers or retailers and sometimes, even directly selling to the masses.
- Distribution – goes hand in hand with retailers and manufacturers. A startup business model that plays a role in-between the provider or manufacturer of products and the masses or to a retailer which will then distribute to the mass consumers.
- Niche business – a startup business model that is not completely that rare but not that common either. The main focus is on the needs of a market niche and services it in a way with products and services that a larger business can’t. An example of this would be special boutiques, agencies, etc.
The list above is just the most basic startup business models that one can proceed on. There are, of course, many more that you can choose from. You can check out a more thorough list of business models here: Business Model Examples.
Download Financial Plan Template for Startup Businesses
To ensure that you are prepared for the unknown as well as manage your finances, the need to have a working financial plan is very important. Just by simply having a financial plan for a startup business will make a huge difference for it can help with the management of the financials as well as be able to make the right strategic financial decisions and avoid certain risks that will affect the business in the future. This is why creating a financial plan is a critical factor for a startup business’s survival against countless competitors that already existed and other risks that one might encounter especially for startups that are new to the industry. Hence, it is very important to create a financial plan for startups.
It’s a good thing that it is possible to build a financial model for a startup business without having to spend a lot of time and money. One does not need to be a professional either to be able to model a Startup Financial plan model. To create a startup financial model for your business, you do not need to be a finance expert for what you need is the right set of tools, such as a financial plan template for a startup business to simply get started. By utilizing these available templates for download, you can acquire a template to use as a starting point for your financial model.
Downloading a financial plan template for a startup business is very convenient as well as provides a nifty tool to help the financing for a startup business. So, if you’re interested and in need of a financial plan template for a startup business, you can take a look here at eFinancialModels for more financial model templates for startups, as you freely choose from which industry your preferred startup business model fits.
Rest assured, our financial model templates ensured with the best quality from different financial modeling experts and are ready-made to be used by any kind of users such as executives, bankers, agents, entrepreneurs, etc., from different countries such as the USA, UK, Canada, Australia, Japan, Germany, France, and many more countries all over the world who are looking for ready-made financial plan templates to support them in completing their financial modeling and analysis tasks.
This Financial Model Template in Excel provides an easy way to forecast the financial performance for a Mobile App or similar Software. It focuses on revenues from paid downloads, in-app purchases, subscriptions and advertisement income
The Pharma Biotech Valuation Model Template calculates the risk-adjusted DCF Value of a Pharma or Biotech Company with several products under development. The product forecasts are probability adjusted to take into account the success probabilities a... read more
Hire a professional financial modeler to assist you with your own financial modeling projects.
The commercial real estate valuation model template assists to run a professional DCF Valuation for a commercial property such as an office building, industrial site, logistics building, storage or a retail building. The model comes as BASIC, PRO and... read more
The Hotel Investment Financial Model provides a framework to forecast the expected cash flows for a hotel investment and calculates the relevant investor metrics such as the IRR (levered and unlevered).
The Beverage Manufacturing Startup Financial Model Template assists founders of Beverage Startup Companies to determine their financing needs and raise capital when talking to investors.
The Hotel Valuation Financial Model provides a simple way to forecast the expected cash flows for a hotel investment and calculates the relevant investor metrics such as the IRR (levered and unlevered).
This is an Excel financial model template for an upstream oil & gas project.
This is a collection of financial model templates for real estate businesses and its related sectors.
The Gold Mine Investment Model is used to determine the financial feasibility of a proposed Gold Mine Investment. The Financial Model outputs IRR and NPV based on the Mine Life expectation.
The Gas Station Financial Feasibility Model Template provides you with a framework to determine the financial feasibility of your next gas station project and come up with an appropriate financing structure. The model calculates the required funding ... read more
This is a collection of financial model templates for projects or ventures in the Renewable Energy Industry and its related sectors.
Offering you with Custom financial modeling services or assistance by an experienced financial modeling team called Big4WallStreet.
This financial model attempts to give the user a full scope of starting a 250 bed (adjustable) hospital. It will allow for all revenue and cost assumptions at a very complex level that is fully dynamic as well as show effects of a loan as % of startu... read more
The Wind Energy Financial Model forecasts the expected financials for a Wind Park project and calculates the project's IRR and NPV.
Looking for a fertile niche for business development? Then we advise you to pay attention to boutique hotels. Every day their popularity is growing. Today, more and more VIP guests prefer luxurious, comfortable, and great boutique hotel apartments in... read more
Build your dream car wash scenario and see what kind of cash flows play out.
Key logic designed to forecast cash flow up to 10 years for a fitness center that has recurring monthly fees.
Includes all the assumptions you need to project the gross revenues and profits of a LaaS platform (Lending as a Service).
Financial Modeling Services on Request or mainly Customized financial modeling and tracking/reporting automation services.
Highly dynamic financial model that is specific to renting equipment out. High attention paid to the cash flows and timeliness of them so the user has optimal planning and insight capability.
Launching and running a restaurant business is one of the most attractive types of investment. Almost every professional chef thinks about how to open a restaurant. Do you want to realize your creative potential, receive great satisfaction from the f... read more
This bundle of financial model templates provides you a package of relevant SaaS, eCommerce and Online Marketing financial model templates
Allow a potential miner to see visually and numerically (annual basis) what their possible financial position would look like when starting up an open-pit mining operation.
The Dairy Farm Valuation Model forecasts the expected financials for a dairy farm and calculates the resulting DCF value.
Commercial Real Estate Excel model which generates the cash flows of the project as well as for equity investors and calculates the relevant metrics (debt yield, debt service coverage ratio, cap rates, and interest coverage ratio).
This is a collection of financial model templates in Excel for businesses in the Manufacturing industry and its related sectors.
This detailed, yet easy to use three statement financial model will allow you to calculate your business' profit and loss, build a balance sheet and calculate cash flow, as well as perform a valuation for a start up or already operating restaurant bu... read more
The Restaurant Valuation Model assists entrepreneurs to quickly derive a financial plan for a restaurant chains. The restaurants can either be owned or operated by third-parties as Franchise.
The DCF Valuation Model for Restaurants provides a business plan in the form of an Excel Template to value a restaurant based on the Discounted Cash Flow Method.
Start Up Solar Farm Excel Model presents the business case of an investment in the construction of a solar farm and the sale of the energy generated from it. The model generates the three financial statements as well as the cash flows and calculates ... read more
The Poultry Farm Valuation Model allows forecasting the financial statements for a poultry farm based on operational metrics such as the hatchery ratio, mortality rate etc. The financial model calculates the resulting DCF value of the farm.
The Mini Storage Business Plan Templates provides a financial plan to start a mini storage business. Enter your expected rent roll and cost structure and calculate Project IRR, Investor IRR and required funding.
This is a collection of financial model templates related to real estate.
Hire a professional financial modeler to assist you with your own financial modeling projects.
This is a collection of financial model templates for businesses in the Information technology Industry and its related sectors including SaaS, Mobile App, eCommerce, Organic and Paid Marketing campaigns.
The financial model provides an excel template for a multi-year financial plan, DCF valuation and IRR analysis for a serviced office operator or co-work space.
The hotel business has been one of the most popular areas of commercial activity for many years. And if you want to become a successful hotelier, not only famous but also making great money, then you should familiarize yourself with our offer (busine... read more
This is a collection of financial model templates for businesses in the Agriculture Industry and its related sectors.
The Biogas Financial Model forecasts the expected financials for a Biogas plant project and calculates the IRR and NPV values for the project.
The eCommerce Valuation Model forecasts the expected financials for a webshop or eCommerce business and calculates the resulting DCF value.
A cafe is a place for meetings with friends, for negotiations and romantic dates. More and more consumers are willing to pay for this service. That is why new cafes, coffee houses, cafeterias grow at every step like mushrooms after rain. If you are w... read more
This valuation model in Excel assists fish farmers and investors to value a fish farm based on the Discounted Cash Flow (DCF) Method. The model is fully comprehensive, including a fish nursery, hatchery and fish farm.
The Private Equity Leveraged Buyout Model offers a simple template to calculate the financial returns (IRR and cash on cash multiple) of a leveraged buyout acquisition from a Private Equity investment perspective.
Plan out all aspects of starting up your own mobile home community or park. End to end from assumptions to return data.
E-commerce Business Models Highlights Three-year e-commerce business plan is useful to create e-commerce revenue models and calculate the costs of starting an online business: check profitability, plan daily and yearly revenues and forecast multiple ... read more
This Financial Model Template in Excel assists you to determine the financial feasibility for your next Tourism Project. The model comes up with monthly and yearly financial forecasts based on the estimated number of visitors and revenue models relat... read more
Today, very few people visit state medical institutions because the fear of a dentist still exists in people`s minds since childhood. The reason for this is the superficial level of service and training of public dentists. That is why so many private... read more
Many doctors who are tired of baseless nagging of the authorities and irregular schedules go into their own business. Yes, many people have no medical education. Still, with the necessary organizational skills and an understanding of the specifics of... read more
Test out various assumptions to see if it makes sense for you to open a franchise or multiple franchises. Includes assumptions specific to the operations of a franchise.
3 statement 5 year rolling financial projection Excel model for a startup /existing manufacturing business
Compare fixed and variable legs of an interest rate swap.
This is a collection of financial model templates for businesses in the Education Industry as well as its related sectors.
Do you dream of a successful hotel business? Do you want to combine work and comfortable rest? Then it would be best if you thought about your opening resort. A private hotel on the coast or, for example, in the mountains, can be a very profitable pr... read more
Do you have managerial talent? Do you have a clear idea of the competent functioning of a paid clinic? Then you should consider starting your outpatient medical practice! The start of private outpatient medical centers is relevant today and, with pro... read more
Build a 5-year financial projection for a used car lot / dealership.
The Commercial Real Estate Investment Model allows calculating the investor return when investing in commercial real estate property. The financial model is especially helpful when identifying the uplift potential from the non-letted area and assessi... read more
The purpose of the model is to forecast the cash flows in form of a financial model in Excel when starting a new language school or to value an existing language school via Discounted Cash Flow (DCF) analysis.
Restaurant Financial & Business Plan consists of a financial model in excel and a business plan in PowerPoint for the opening of a new restaurant.
This Waterfall Model Template in Excel provides a calculation model for a four tier Private Equity Waterfall profit distribution scheme.
This is an Excel financial model template for a single blockbuster product where the founders need to raise funding from investors to setup production capacity for market launch.
This Model provides a framework to accurately forecast the financial statements of a Construction / Infrastructure company over the next 10 years. The model uses a detailed breakdown to estimate the company’s operating assumptions on order book, bo... read more
A 5-year financial model tailored to starting a golf course and projecting financial performance for its business plan.
Plan out the financial plan your hair or beauty salon. The beauty & hair salon business plan goes up to 10 years and has plenty of granularity.
Are you the one who’s known for making the best birthday cakes? Maybe you have found the perfect donut recipe that makes everyone’s mouths water over the sight of those delicious, juicy buns? It might be time to turn your talent into a profitable... read more
The main purpose of the model is to allows user to easily compare the financial performance result from one period to the next or between actual and budget without having to look at multiple financial statements
Solid Waste Treatment Plant Model is a project finance model for the construction and operations of a waste management plant.
This financial model provides a template financial plan to derive the expected cash flows of a machine rental business over the next 10 years by using a bottom up approach.
Today e-commerce is one of the quickest growing business lines, more and more people are shopping online, and this trend is increasing every year. If you want to start your online store, but don’t know in which direction to choose, online clothing ... read more
A coffee shop is a small business that belongs to foodservice enterprises but stands out from them because of a specific assortment. In addition to the obligatory coffee, among the variety, there are confectionery products that successfully harmonize... read more
This is a collection of financial model templates for businesses in the hospitality industry and its related sectors
A bar is a place where people of any age can relax and enjoy their rest. It is worth noting that there are not so many excellent bars, even in the center of the capital. That is, one can also say that there is a shortage of cozy establishments with a... read more
Advanced Real Estate Model for a professional DCF valuation of Office, Retail or Industrial Properties.
Dynamic financial model for calculating cash splits to sponsors/investors based on various IRR hurdles getting reached.
The Rice Farming Financial Model enables rice farmers and investor to evaluate an investment into a rice farming operation via Discounted Free Cash Flow (DCF) and Internal Rate of Return (IRR) analysis from an investment point of view.
Financial model for a typical project finance solar project.
3 statement 5 year rolling financial projection Excel model for a startup /existing distribution business
Get Hotel and Restaurant financial model templates with the bulk price!