Financial Modeling

^{Weekly Trivia}

Data Source: Federal Reserve Banks’ 2023 Report on Nonemployer Firms

^Introduction

I often joke how financial modeling is my love language, but it has occured to me that most people have never seen one.

And I’m going to teach you everything you need to know in 30 seconds.

Financial Modeling 101

A financial model in it’s simplest form is a fancy calculator. It tells the story behind the past and potential future of any company, but in numbers instead of words.

I often use them to run a combination of what-if-scenarios and also to evaluate the health of a company.

• How many customers do they have?

• How fast are they growing?

• When will they run out of cash?

• What are their margins?

• How many employees do they have?

• What is their revenue model?*

_{*In my example below, SaaS is essentially a monthly subscription. Think of a business model similar to Netflix.}

Watch For Yourself

For whatever reason, I often see people purposely overcomplicate or try to sound fancy when it comes to this topic. That’s why I’ve broken down what one looks like for you.

@jack_boudreau_

Replying to @Noah.Veliz intro to financial modeling #vc #startups #investmentbanking #analyst #jpmorgan

_{*If you don’t have TikTok, you can watch a shorter version on Instagram}

Try It Out!

Now I recognize excel is not for everyone, but that’s why I’ve built one for you in Google Sheets.

Open it on your browser, play with the assumptions tab, and see how those changes affect the Financials and Summary tabs.

Did I just make financial modeling fun?

Want To Level Up?

Shoot me an email at [email protected].

I’d be happy to share how to use a financial model and build strategies behind customer acquisition, pricing, hiring, financing (raising capital or debt), and more.

My Key Takeaway

Building a financial model is a lot like building a financial plan for you and your family. It’s not meant to be perfect, but it creates a framework that sets you up for success.

And if financial modeling isn’t your forte, then I imagine financial planning isn’t either. That’s why we built Habits!

Thanks for reading, Habits fam. See you back here next week for more.

-JB

Got feedback? Hit reply and tell me what you think…I’m always looking to level up.