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README
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About the Skillshare Class ( http://www.skillshare.com/Financial-Modeling-for-Fundraising-Global/1322114417/1138364970/ )
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1This model is intended to be a base outline to provide everyone a "safe" starting point for building their own model from scratch. I provide more complete templates at http://www.buildforesight.com , and other templates exist on the web (details at http://www.buildforesight.com/build.html ), but the goal of this class is to build your own model, not simply use a template that someone else has built.
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2This model has the sheets to be completed and worked on each week.
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3Feel free to add sheets, split up analysis onto multiple sheets, etc. The goal isn't for everyone to create the same structure, but to reach the appropriate depth of analysis for each business
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4This spreadsheet can be accessed at: http://bit.ly/tdavidsonspreadsheet
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Modeling and Formatting Best Practices
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5To make it easy to understand how calculations are made, there are a couple good modeling and formatting conventions. (Modeling refers to how you structurally lay out the calculations, Formatting refers to how you format the look of the model.
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6Model structure: we like to break out significant sections of analysis into separate sheets. For example, one sheet could focus on costs, one on user acquisition, one on revenues, one sheet an income statements, one a cap table, etc. Since calculations can be carried over multiple sheets, this kind of structure makes it easy for you to "read" a model easily (i.e. it's easier to go to separate sheets than to continually scroll up and down. The combination of all the sheets results in one financial model.
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7Some financial modelers like to put all assumptions for an entire model on one single sheet, others (including me) prefer to put assumptions next to the calculations themselves. Neither way is right, use the way you find most compelling for you. It's your model, and you're the one that will be using it. That said, it's best to follow structure and conventions (and to note things throughout the model), so that you can send the Excel / Google Spreadsheet model to someone else, and they can figure it out quickly.
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8Break calculations into multiple rows as much as possible. This is important. Instead of condensing a calc into one line, break out every significant idea into a separate line.
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9Hard code as little as possible. What that means: put numbers you're assuming in one place, and perform the calculations based on them somewhere else. This makes it much easier to a) understand a model and b) change assumptions later.
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10Color-code your inputs. Use BLUE for your assumptions (inputs), use BLACK for your calculations. This makes it easy to scan and find your assumptions, and easy to understand what to change, how to change, etc. Text, leave in Black.
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11Annotate assumptions with rationales. Don't make someone think about how something is calculated, or where the assumption was created from, or question how grounded the estimate is. Explain in the model, right next to the calculation.
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12This model is based on a monthly design, that then sums up into years. It's important to create projections over small timeframes (i.e. months), because too much can change during years to make the projections meaningful if they aren't done in months.
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13This model is done for 36 months (i.e. 3 years). Most startups know very little about what they are going to be beyond 12 months, but it's important to think ahead and estimate the long-term potential (because that's what we're usually trying to convince people about and understand ourselves). Many people will build models for 5 years. It's a personal preference based on a philosophical debate, but you're free to choose the number of years that makes the most sense for you. If you have to show someone five years of projections, and you want five years of projections, then add months and years to the model (i.e. add columns) to make if fit what you want.
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Questions?
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Discuss on Skillshare at http://www.skillshare.com/Financial-Modeling-for-Entrepreneurs/1002275729#discussions
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 Taylor Davidson
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Me: http://taylordavidson.com
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Financial models: http://unstructuredventures.com
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Twitter: @tdavidson
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Sept 10, 2012
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