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Best practices for financial modeling for a startup

4 points by Akshaya_Sriram ↗ HN
As an early-stage startup founder, I’m working on creating a financial model to project our growth and funding needs. What are some best practices for building a flexible financial model at this stage? Are there specific tools, or templates you recommend focusing on?

5 comments

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geekodour
i don't know but i think the answer should some combination of google sheets/excel. any guides around that would be helpful. I think i would just want to use gsheet at this stage.
ameliap24
At the early stage, your financial model should be simple, flexible, and focused on key metrics. Start with a cash flow projection to understand your burn rate and runway. Build a model that covers multiple scenarios, like best case, worst case, and likely case. Your core metrics should include customer acquisition cost (CAC), lifetime value (LTV), and monthly recurring revenue (MRR). Google Sheets works fine for this stage, but if you want something more robust, tools like LivePlan or Finmark offer good templates. Keep it modular so you can adjust easily as new variables come up.
dapperdrake
Be wary of the bounds of your confidence intervals.

Excel sheets got too large for my personal projections. Built a super simple static web app[1] as a replacement. It handles inflation better and provides a (very) simple monthly mortality model. It shows you select quantiles and the median(!). VaR and CVaR didn’t yield obvious insights and were removed. It’s free.

Have about a dozen happy users already.

Really think through your CAC, LTV and outgoing cash-flows.

Heretical idea: Pour money or cash into QA and watching your customers over their shoulders to solve their actual problems. Not what you think or hope their problem is.

If you have questions, then please, feel free to ask.

[1] https://dapperdrake.neocities.org/investment-calculator