HACKER Q&A
📣 recorderplayer

Guides to Financial Forecasting?


I am putting together a financial forecast for my start up, as we are beginning to talk to investors.

Are there any good guides to building a financial forecast out there?


  👤 mchusma Accepted Answer ✓
In my experience what the most helpful thing to investors and you will be bottoms up understanding of how the business looks with a somewhat reasonable set of assumptions. So make a tab full of your assumptions, number of customers, cost per customer, number of engineers, churn rate.

When do you collect cash from customers? When do you pay bills? How fast can you cycle cash? (Meaning if you pay back marketing over 2 years vs 2 months) a LTV/CAC ratio of 1.5 is not great, but if you have a 1 month payback you basically don't consume cash so that's cool (these can be signs of dads though). But I would just look online for comps for the specific inputs into your model.

If you want a template you can just look at PnLs online.

All forecasts for startups are wildly wrong. But I think of forecasting as a way of valididating a strategy. Lots of people dislike the "if we get 1% of the market we will.be huge" approach, but I like at least validating if that is the case (it is not always the case).

Forecasting can also help you understand pricing. If your market size is about 10,000 buyers what do you need to charge to have a business.


👤 mattrp
Are you seeking help in constructing the mechanics of a model or in taking an existing model and projecting it into the future? Or both?