SaaS Financial Model Framework
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Hi everybody, I’m John Smith, General Partner with Innosphere Ventures leading the B2B software practice. I have over 30 years’ experience founding and building software businesses, taking them from scratch to over 100 million dollars in annual revenue. Now, I’m a venture capitalist, ready to guide you on your journey, helping you build your successful B2B SaaS business.
Today I’ll be talking to you about how to build a financial model for an early-stage SaaS business. I created a financial model framework to help you get started building your own financial model for your business. You can download the SaaS Financial Model Framework from our website innospherefund.com
So, I constantly hear from entrepreneurs how difficult and time consuming it is to build a financial model for their business. The packaged financial modeling tools that you can buy are too restrictive and difficult to adapt to the entrepreneur’s business model and business strategy, and of course, starting from a blank excel spreadsheet is pretty daunting as well. Now it’s very important that each entrepreneur understands how their financial model works since it’s a reflection of their business strategy. So I created a financial model framework providing you a great starting point for developing your own financial model. It’s easily adaptable so you can tailor it to your business model. It’s easy to understand and comes with how-to instructions so you can start using it quickly and it’s visually appealing in a format that investors are accustomed to seeing. It’s a five-year view with monthly breakdowns for the first two years. The P&L tab is completely formula driven so you can focus on the other tabs to create your inputs. The revenue tab is where you input all the types of revenue for your businesses and where you change the assumptions section to reflect how you want to model revenue.
The COGS and operating expenses tabs make it clear where you input your expenses, your headcount and salary assumptions. It’s easy to add and delete job positions to match your business. The assumptions section makes it easy to input your non-personnel expenses. This is where you can expand the framework to put in as much detail as you need. Now, the top portion of the input tabs show the output for that section of the P&L so you can see the result on the same tab as you’re making changes to your assumptions without having to flip back and forth to the P&L tab. The valuation tab provides SaaS metrics and the ability to estimate the company’s valuation. I also provide a list of best practices to help you build a credible financial model. In addition, I provided a SaaS Cost Per Acquisition Framework on our website to help you determine the costs and the return on investment for acquiring a new customer.
So, go to the innospherefund.com website and download the SaaS Financial Model Framework to get started building a financial model for your business.
Once you’ve established a product market fit for your business and are ready for seed funding reach out to Innosphere Ventures and let’s see if we can be your partner helping guide you along your journey to success!