Investor Connect Podcast

Assumptions and Drivers in the Financial Model

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

In building out your financial model, make explicit the assumptions you are using and identify the drivers in your business.

Create a tab on the spreadsheet for assumptions and drivers for the investor to review.

As you build out the revenue forecast, capture the assumptions behind the growth rate.

For the costs, make clear which are fixed and which are variable costs. 

Identify the drivers within the business.

Typically this is the number of products sold or the number of customers signed up.

This drives the revenue line as well as the variable costs.

For example, the more customers targeted for revenue, the higher the cost of sales and sales commission.

Investors look to see if the costs align with the revenue forecast.

Understanding what drives your revenue and costs will help you build out your financial model and create more accurate projections.

hank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

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Direct download: Assumptions_and_Drivers_in_the_financial_model.mp3
Category:general -- posted at: 6:00am CDT