Every entrepreneur should construct their marketplace financial model. Whatever the phase your business is currently going through, having your financial model in place will boost your business and help you, as a business owner, in your planning.
This is the toolkit for you, the entrepreneur and soon-to-be business owner, on the topic:
What is a marketplace financial model, anyway?
Let’s break it into two parts. First, a marketplace is any platform that enables users to complete a purchasing order. As a business owner, you provide services and goods to potential customers who demand to buy what you offer. The e-commerce marketplaces are the most trending and booming in today’s businesses. Examples on these include Amazon, eBay, Alibaba, and Walmart. Second, a financial model is a system you choose to follow in recording the operations of your marketplace. Also, your model should summarize all your business operations numerically. Also, to help you visualize, picture a spreadsheet with many columns and rows of all relevant data on your business value proposition. However, while you envision that, you must know that there are various formats and templates for the model you choose for your business.
Why a marketplace financial model for your business?
So, why do you need that for your business since you are already easily recording your daily transactions?
If you wish to grow your business and expand beyond your current operations and day-to-day purchase orders, then you have a reason to complete this post.
So, just to list a few, here’s why it’s important:
- Seeking funding for your business startup
- Making future projections about your business
- Understanding your current business revenue model
- Making better-informed decisions regarding your current business operations
- Organizing the budget for your business
- Prioritizing opportunities over others
Practical steps to get this right
You are probably waiting for a step-by-step guide. However, I plan to take you through other leads to set the foundation for your model.
Keep track of all data for your marketplace financial model
Never lose any data related to your business. In other words, if you have your business up and running but still need the know-how to construct your financial model, the least you can do is save and enter all your data. Then, whenever you are ready, you will need all the information on the early-stage transactions of your business.
Excel can do magic
Like a pro, Excel formulas help you build and edit your financial model with minimal time and effort. Luckily, many online courses boost your accounting and financial skills using excel.
Double and triple check
An introductory remark, yet overlooked most of the time.
Make it a habit to proofread the numbers in your financial model. If you have several marketplaces for your business, you are already managing big chunks of numerical data. So, ensuring the numbers entered in your model are correct is critical to success.
Schedule regular meetings for discussing the model
Equally important, models are meant to be discussed around as a team.
To put this differently, gather your team around regularly to review and screen the financial models of your business marketplaces. This helps you to understand the gaps you need to fill in your models and gives you new insights into your business. However, it would be best if you remembered to include only relevant team members with a solid background and know-how about the topic to save you time and energy.
Hire A Pro
Yes, you can do that. However, if you have the budget, I strongly recommend recruiting a consultant to help you plan your financial modeling efficiently and effectively.
Because the number of marketplaces is evolving rapidly and is expected to continue, having a specialized contact to plan your models for each marketplace and help you read the numbers correctly saves you time and effort. In addition, a technical consultant will always be on the lookout to keep track of all relevant information and up-to-date inputs and outputs to make your model successful. Also, this enables you to focus your energy on making the best use of the system your pro has created for your business.
To sum up, this was a quick reminder of the importance of a marketplace financial model and why every early-stage business needs to have one. From day one, please keep track of all your business data, learn and train yourself on useful excel formulas, proofread your models, and schedule meetings to hear what others say about them. Lastly, hiring professionals for that is always a good idea, especially when you have numbers and math involved.
Finally, we can help you plan your financial models. Remember, this enables you to identify opportunities in the marketplace, seek funding for your business, and make better present and future decisions related to your business.
Meet The Author Of This Article
I’m Jenny Ayman, a project manager in the development field with specific knowledge and experience in capacity building and entrepreneurship programs. I aspire to transfer the hands-on experience I gain in my professional career through writing.
Also, if you need help planning your business, I recommend checking out some of our freelancer’s business plans or pitch decks!