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An Introduction to Business Financial Modeling
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This version has been modified for Google Sheets
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Part 1
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Modeling best practices
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Basics
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Useful functions
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Mac keyboard shortcuts
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STRENGTHS OF FINANCIAL MODELING (AND CAUTIONS)
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Why do we create financial models?
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better understand your assumptions and goals
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gain insight into your business' pressure points and failure points
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better understand your scaling cost structures
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examine the realism of milestones and cash needs
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helps you prioritize key metrics, and gives you targets to work against
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gets the team on the same page regarding operating goals
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sets hopes / expectations for your investors and team
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CYA: creates a document everyone can sign off on, reducing revisionist memories later
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Cautions
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no plan survives the market. A model should be created, but not taken literally
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a model is best done as a living document, because no plan survives the market
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too complex is as dangerous as too simple; a complex model does not mean a more accurate one
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garbage in = garbage out, i.e. if your assumptions are wrong, the most elegant model in the world will fail
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if something seems too rosy, ask yourself hard questions
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Cross-check your assumptions and data inputs (for example: check your customer growth against the total market size)
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Copyright Giff Constable 2021
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