ALL >> Education >> View Article
How Financial Modeling Helps Startups?

One most crucial thing that founders and CEOs of startups and small businesses need to always focus on is to never run out of money. Knowing and completely understanding your business’s financial model helps the founder stay in charge and take game-changing decisions. The startup financial model improves the decision making process by allowing one to understand how and where can the business successfully scale. It also helps to predict near-future scenarios and maximizes opportunities and profitability.
Financial models are the ‘what if’ tool to test future financial scenarios of a business or a startup and predict how various factors can affect profitability. It facilitates startups to develop what-if scenarios and evaluate the most likely outcome. Since startups do not have much of a historical data to compare, various other factors can be used for predicting the future.
Financial models are generally needed while raising outside capital. They are also useful for making internal decisions and plans like employee wage increase and hiring.
Excel and Financial Models
All financial models are ...
... Excel spreadsheets. An Excel Financial Modelling Course can be of immense help to someone who is completely new to the concept of financial modeling. Modeling can provide information on many different scenarios. By changing the variables, such as price per unit, cost of delivery, and estimated gross profit, you can readily predict which changes will most impact your bottom line.
The best part of financial modeling is that it always works for future progress. As times and business scenarios change you might need to put in new numbers to see the new outcome. A founder must know what variables will affect the financial model. This helps to detect which cells should need manual inputs. All changing variables must be in cells that can be manually recorded. This helps in predicting a future based on the latest scenarios. Like for example now after the COVID 19 crisis if a startup goes for funding round it needs to change the month old financial model and update the same based on the new situation.
How to start?
If you are ready to make a model for your business but have no idea where to begin- do not worry. An online financial modeling course or a full Business Modeling class is your answer to this. Anyone from a financial background, a Chartered Accountant (CA), a business graduate, or even a founder who understands numbers with the non-financial background is the ideal candidate for this course.
Advantages of a good startup financial model
A good financial model can also help in these ways:
Test and verify the key drivers for your business
Compare various business choices like pricing models and sale models
Calculate the amount of capital needed by a startup to survive and grow
Calculate the burn rate
Know the profitable options and projections
Be prepared while speaking to potential investors and effectively communicate profitability projections.
Financial modeling course helps to gain knowledge of Financial Analysis- a core skill for anyone dealing with business, from an entrepreneur to equity analyst or an investment banker.
Rajiv G. is a Strategy and Corporate Finance Consultant with 15+ years of experience. Previously, he has worked with the Strategy and Corporate Finance practice at McKinsey & Company. He has advised clients globally in multiple industries on various Strategy and Finance engagements. Prior to this, he has worked as an Equity Research Analyst with CRISIL. He is a CFA and Chartered Accountant.
Add Comment
Education Articles
1. Which Books Have Been Published By Iiag Jyotish Sansthan Founder Dr. Yagyadutt Sharma?Author: Yagya Dutt Sharma
2. Sap Sd Training In Bangalore
Author: VITSAP
3. Agile Scrum Methodology Explained In Simple Terms For Beginners
Author: Learnovative
4. Blue Wizard Liquid Drops 30 Ml 2 Bottles Price In Hyderabad
Author: bluewizard.pk
5. How Java Skills Can Open Doors To Global It Careers – Sssit Computer Education
Author: lakshmisssit
6. How Digital Marketing Can Help You Switch Careers
Author: madhuri
7. Ryan Group Of Institutions Partners With Royal Grammar School Guildford, A 500-year-old Institution - To Launch Premium British Curriculum Schools In
Author: Lochan Kaushik
8. Join Site Reliability Engineering Training Hyderabad | Visualpath
Author: krishna
9. Top 7 Tips From An Mbbs Admission Consultant In India
Author: Rima
10. An Ultimate Guide To Mbbs In Russia; An Ideal Destination To Study Mbbs Course!
Author: Mbbs Blog
11. A Complete Overview Of Mbbs In Nepal!
Author: Mbbs Blog
12. Affordable Online Mba’s With Global Recognition...
Author: University Guru
13. Induction Training: Building Strong Foundations For New Employees
Author: edForce
14. Dynamics 365 Training In Hyderabad | Online D365 Course
Author: Hari
15. Why Aima Leads In Post Graduate Diploma In Management Excellence
Author: Aima Courses