Back to: Build Your Business
A financial model, usually in the form of a spreadsheet, is a tool that helps you understand how your business might perform based on your best guesses around revenue and costs. When done well, a financial model can be used for management decision-making, budgeting, fundraising, and forecasting. A financial model is often the centerpiece of a business plan, a formal written document that describes the goals of a business and the methods and timeframe for attaining those goals.
Usually in the form of a spreadsheet, a tool that helps you understand how your business might perform based on your best guesses around revenue and costs.
A formal written document that describes the goals of a business and the methods and timeframe for attaining those goals.
Financial models can be simple or extraordinarily complex, but when you’re first starting out, at minimum they should allow you to answer the following questions:
Based on my startup and operating costs, how long will my initial investment last?
How much revenue can I expect to bring in and when?
What is the timeline for beginning to turn a profit (your “break even” point)?
We’ll walk you through the information you’ll need to answer these three questions.
If you’re a visual learner, watch this guided tutorial on how to use the Ocean Farm Basic Financial Model, and what it can tell you about the revenue potential of your farm.