Accounting, Bookkeeping, Finance, HR, and Tax for Startups.

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Video Transcript:

Startup financial modeling 101. What do you need to know before you build your startup's financial model? There are three key things to think about before you start building your startup's financial model.

One: it's very important to know the goal of the model. Why are you doing this exercise? Are you just testing to see if your idea even makes sense? Are you getting ready to fundraise? Are you doing a budget? You want to use or customize and create the level of detail that matches with the type of model that you're trying to build.

Two: you really want to know the KPI's for your business and not just the financial ones but things like the number of clients you expect to have at different moments when you expect to release products or MVPs. And then three: you should use an existing simple financial model template. Like one of the free ones available on the Kruze Consulting website. Don't try to reinvent the wheel. There are many free templates available. Just grab one.

Here are a couple of tips for you as you're building your startup's financial model. One: you'll want to pay very careful attention to your headcount projections and your payroll. Most of the early-stage startups burn is in payroll and in headcount. So, knowing this and understanding it is very important.

And two: you should have a really strong opinion on the amount of revenue and the amount of cash burn that you'll have in the coming years in your financial model. And you'll want to make sure that the burn and the size are commensurate with the opportunity of the company that you're trying to build. Head over to our website and you can download one of our free financial model templates. Hope this helps.

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