There are certain benefits when using startup financial model templates in Excel for entrepreneurs:
1. Model similarity: Many Startups have similar economic models. This means one can benefit from using models in similar industries. Designed by experts, startup financial model templates are available for a variety of business types and industries such as manufacturing, software-as-a-service, hospital, services, mining investment, agriculture and farming operation, valuation of real estate, etc.
2. User friendliness: Most financial model templates can be used intuitively when following the model structure and layout, as they apply a clear and convincing model logic. Inputs normally are clearly marked as such and changing them makes it easy to manipulate the model in no time and immediately calculate the financial ratios and results from the new scenario.
3. Startup financial model template in excel normally focus on cash flow projections and on topics of relevance to Startups such as the burn-rate, break-even point, separation of variable and fixed costs, required funding amount, etc. More sophisticated models also project proper financial statements such as cash flow statement, balance sheet and income statement together with fixed asset and debt schedules.
4. Understanding the economics of a Startup: By using a financial model template, a Startup Entrepreneur can achieve a better understanding of the financial situation of his business, prepare for scenario analysis, lay the foundation for negotiations in M&A transactions, do company valuation by using the Discounted Cash Flow (DCF) method, and in general get a much better understanding of the economics of his Startup etc.
5. Financial reports and charts are normally a part of a Startup model and can be used in pitch decks and company presentations.
6. Flexibility which MS Excel offers means the data collected in the financial model can be used for other financial modeling exercises, different financial scenarios or any other ad-hoc purpose required.
Investors will be impressed when presenting them with a well structured and insightful financial model. Furthermore its easier for them to correctly understand your business and base their investment decision on a solid basis. For the entrepreneur, preparing a financial model is one way to demonstrate competence and create trust that there is a financial plan in place to turn a Startup into a financial success.
So, what are you waiting for? Download some of the Startup financial model templates similar to your business case and move your business ahead by making smart and educated financial decisions!