How to Build a Financial Model for Your Startup

How to Build a Financial Model for Your Startup Most first-time founders avoid financial modeling for as long as possible. It feels like something you do when you're bigger, more serious, when you actually have revenue to model. That's exactly backwards. A financial model isn't a record of what happened. It's a map of what you think will happen, and why. Build it early, and you'll make better decisions about pricing, hiring, and how long your money lasts. Skip it, and you'll hit a wall you could have seen coming six months earlier. Here's how to build one that's actually useful, without an MBA or a finance background. What Is a Startup Financial Model, Really? A financial model is a set of connected spreadsheets (or a structured planning tool) that projects your revenue, costs, and cash position over time. Most startup models cover 12 to 36 months. The key word is "connected." Your revenue assumptions feed into your headcount plan. Your headcount plan feeds into your burn rate. Your bu