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Designing the financial model in a targeted manner with the Retiba analyst group

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Building and designing a financial model for startups includes a framework for making decisions about the internal affairs of a business, including financial resource management, resource allocation decisions, and risk management. Financial modeling It is a tool that provides the founders with the possibility of predicting the financial performance of the business. Businesses use the financial model to forecast revenue, expenses and cash flows to the extent that it is possible to assess the viability of the business. Creating a financial model is a specialized task that requires sufficient knowledge and expertise. For many years, the financial experts of Retiba Analysts Group have been working on designing a successful financial model in all stages of maturity of all types of businesses. Preparation of a startup financial model that is prepared in principle increases the chances of attracting and increasing capital from venture or angel investors for businesses. Creating a financial model for a startup is a difficult task, but by dividing this process and getting to know each step, it is easy to start building the model.

Understanding the different stages of designing a startup financial model

The design of a startup’s financial model is formed with a set of data and assumptions; By entering the necessary data, the space is prepared for the design of the startup financial model. Cash flow, signed contracts and business customers all play a role in financial modeling. To do this, it is necessary to perform the following steps to form and create a successful startup financial model.

1. Defining the structure of the model

2. Enter assumptions

3. Building a financial model

4. Financial model test

5. Modifying the financial model

Defining the structure is the first step in the design of the financial model, during which it is discussed which of the financial statements are to be included in the model. After inputting the assumptions (sales, costs, profit rate) a realistic model of a business can be built. With the entry of basic information, the space for estimation is provided and the ability to predict financial statements such as profit and loss statement, cash flow statement and balance sheet is created. Finally, after testing the financial model, if necessary, changes in its structure are implemented to prepare the modified financial model.

Building a financial model for a startup

Building a financial model for startups is one of the most important things that business owners can do to better control things in their hands. There are many auxiliary tools for building financial models, which are a good guide to start modeling. The modeling tools help the applicant to easily estimate their income or estimate their expenses. To design the financial model of startups, the following steps are recommended.

1. Estimating income based on market demand and pricing

2. Estimating current costs (variable cost + fixed cost)

3. Calculating profitability (subtracting costs from total revenue)

4. Determining the required budget (to keep the business alive)

5. Finally, the construction of the financial model

There are many softwares for designing and building financial models, but according to financial analysts, Excel software is the most suitable tool for building startup financial models. If you are not familiar with how Excel works, there are many free tutorials online that will help business managers get started. By collecting all the data mentioned above, the financial modeling of a startup is gradually formed and provides good information about the life of the business to different people, especially investors.

What are the necessary considerations when designing a startup financial model?

It is more important to pay attention to some points in the construction and design of the financial model of startups. For example, it is important to pay attention to the time horizon and to know that there is an intention to forecast for the next few years. The next thing is to pay attention to details; How much detail is the financial model supposed to incorporate? And the third item is the goal of designing the financial model; What purpose is this model supposed to be set for?

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