Tue, 22 February 2022
Mistakes to Avoid in Financial Modeling
Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.
Your financial model can be used not only for fundraising, but also for running your startup.
Avoid these mistakes in setting up your financial model:
Tying your revenue to a factor that doesn’t actually drive revenue.
Figure out what actually drives sales and build your model around that.
Trying to identify exact numbers for factors such as conversion rate.
Instead, use a range of numbers to account for variations.
Skipping the research into companies in your sector.
Instead, spend time looking at similar companies to find out what drives their business.
Trying to include too many drivers in your business model.
Instead, focus on the top drivers that account for the majority of your sales.
Setting up the financial model for generating financial statements only.
Instead, set up the model, so it also calculates key performance indicators.
Design the spreadsheet for running the business in addition to raising funding.
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