As an entrepreneur, you are fully expected to fall in love with your idea. The key, however, is to ensure that you don’t become blinded by that love and end up making stupid choices in business. Your financial model is a great protection against blind love. A financial model, or a financial plan, is basically an excel document into which you can plug various factors that will impact your financial future as an entrepreneur.

1. Financial Models for
Startup Entrepreneurs
8swellstrategies
Virginia Ginsburg
President & Chief Consultant
Swell Strategies
www.swellstrategies.com

2. 8swellstrategies
Your Idea = True Love
As an entrepreneur, you
are fully expected to fall in
love with your idea.
The key, however, is to
ensure that you don’t
become blinded by that
love and end up making
stupid choices in business.
Your financial model is a
great protection against
blind love.

3. 8swellstrategies
What is a Financial Model?
A financial model, or a
financial plan, is basically
an excel document into
which you can plug
various factors that will
impact your financial
future as an entrepreneur.
This is not the right type of model to build
for your business.

4. 8swellstrategies
Financial Model: Example
A software entrepreneur needs to sketch
out pricing packages and then model what
will happen if 10, 100, and 1,000 people
start using his software.
For example, if he gets 100 people to pay
for his software, at $100 each, he will make
$100,000.
But in addition to this “happy number,” he
also needs his model to tie in how much it
will cost him to acquire each customer and
fulfill each order.

5. Financial Model: Customer Acquisition
You need to estimate both prospective customers and sold customers.
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6. Based on your customer acquisition model, you can estimate revenue.
8swellstrategies
Financial Model: Revenue Streams

7. Financial Model: Fixed Costs
Your fixed costs are the expenses that your business has to carry just to
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“keep the lights on.”

8. Financial Model: Variable Costs
Your variable costs are the expenses that vary based on the number of
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customers you serve.

9. 8swellstrategies
Financial Model: Profit and Loss
Your profit and loss (P&L)
worksheet is also called an
Income Statement.
This will bring all of your
information together so
that you can see how your
income and expenses
compare and, ultimately,
when you can expect to
see a profit from your
business.
Check out this template available from
Entrepreneur Magazine.
http://www.entrepreneur.com/formne
t/form/939

10. 8swellstrategies
Financial Plan: Having Fun
Once you have set your
financial model up as a
linked workbook in Excel,
then you will have the
opportunity to play with
your numbers.
For example, you can
create “worst case,”
“average,” and “best case”
scenarios to help you
determine the risk level
walking into an
opportunity.

11. 8swellstrategies
Financial Plan: Don’t Forget!
Your financial model
should be a living,
breathing document that
you reference regularly to
make sure you are on the
right track.

12. Good Luck!
8swellstrategies
Virginia Ginsburg
President & Chief Consultant
Swell Strategies
www.swellstrategies.com