Financial Modelling is Not Just an Activity for Fund Raise
It is a Strategic Tool
Over the past 3 years, I have probably worked on ~100 financial models and every single one of them is different.
We don't have cookie cutter formats for each industry where we plug in numbers and get outputs, we build every single model grounds up.
If I have to be poetic about it, ‘It all starts with a blank cell’
Founders often ask us as to why do we reinvent the wheel every time? We can do much more if we have formats ready.
Our belief is simple, as long as your product/service has a USP, the financial model cannot be the same.
To give you a perspective, on an average
The simplest model I have built has over 5,000 lines of formulas (for tech people it is like your codes) and the most complicated one (so far) has over 100,000 lines of formula.
The reason why it is worth going the extra mile
- it allows you to control outcomes at a monthly level
- it allows you to dissect every single variable of your business to figure out ways to unlock value
- it allows you to simulate any strategic plan that you have in mind
Bottom line, it has to be close to reality.
So, for all the entrepreneurs, next time you are thinking of building a financial model. Ensure it doesn’t just throw out a Valuation number but helps you in Decision Making.