Every financial model must include a detailed breakdown of expenses over time. In this post, we will detail the expense categories that are typically included in a SaaS financial model. We also cover how to update our financial model to include additional expenses for your business.
In order to scale every good startup will need a healthy dose of sales and marketing. As a startup, you need to understand this relationship to achieve your sales goals. A standard financial model won’t be able to take you there alone. You’ll need a model designed for SaaS sales and its decisions (business development headcount, close rate, annual contract mix). An Enterprise Sales Model is going to give your business the predictability it needs here. It will take the various inputs and map them for you to deliver a baseline you can use to monitor your success.
Since we’ve seen the first steps of developing a financial model let’s move into the second half- how to finalize a financial model. We’re going to take the assumptions, revenue forecast, and expense forecast that we developed last time and jump right in on creating an income statement, statement of cash flows, and key charts for data visualization. Grab your spreadsheet, open your formula tabs, and let’s get started!
We know how important fully formed financials are for operating your business and demonstrating market potential for investors, but how do you actually build a SaaS financial model? Getting started here can seem like a daunting task, but with the right tools and time commitment, you can make it happen. Here are the essential steps for getting your model going:
A financial model is more than a series of cells and charts in Excel or Google Sheets. It’s a place where you validate assumptions, unit economics, and your business as a whole. A well thought out financial model will save you time on the execution front and make it possible to secure venture financing. Here are some of the ways working on a financial model can take your business to the next level.
As a SaaS business owner you have a lot of things to optimize and it can be hard to know where to focus. So why focus on churn?
Preventing churn is about keeping existing customers, which means keeping existing revenue. This is easier and cheaper than acquiring new customers. It’s easier to keep existing dollars flowing than find new dollars.