At Albusi, we have been working on creating a financial model that is perfectly suited and we came across many points to address. For example, to create a perfect financial model template, one has to know whether the company is monetizing with subscription or direct sales. It is also important to know the industry it operates in and the country as well. Additionally, a lot of questions and personalization are required to achieve the perfect financial model template.
We have been working on these templates for a while and believe that it is complex enough to be used for projecting financials and everyday business use. So let’s talk about the different financial model templates that we have, as well as how you can use them.
Startup Financial Model Template
Firstly, we have a couple of small startup financial model templates that you can use. These were designed initially for a subscription platform like a new mobile app or so.
The work there was straightforward. Most investors require an income statement for around five years, a balance sheet, and a cash flow analysis.
Importance of Financial Statements
The income statement needs to showcase how you are projecting your financials. It also needs to show why you are projecting them as such, as well as your expenses.
The world or the investors need to know how much you think you are growing. When it comes to the accuracy of projections, almost 100% of companies can never project sales to the right number.
But if they can reach a level of accuracy that is acceptable, that would be extremely impressive.
The cash flow analysis is important for investors to know whether you are going to get low on cash in a specific period and need external additional investments.
The balance sheet would show how well your company is positioned as a financial business. People like Warren Buffett would usually just look at the balance sheet and assess a company from that.
Nowadays, with startups and fast-moving tech initiatives, it’s difficult to assess a company by a balance sheet. It would be easier if the company is selling carpets, for instance.
Innovative Financial Model Visualizer
But let me tell you about the second financial model template that we are working on. You’re going to like it. Our CEO started to think about how we could better visualize a financial model and create a template accordingly. That’s why we are working on creating a financial model visualizer.
The users could input their industry, their company’s information, as well as their revenue performance.
From that, we would have a visualizer that compares them with Fortune 500 company’s performances in the same industry.
If you are working on ride-hailing and you are intending to grow by a compound annual growth rate of 50% each year, it would be very beneficial for you to look at Uber’s performance to assess whether it is possible or not. It’s within reach or not, rather than just putting numbers blindly.
Enhanced Financial Model Template
This visualizer would not only have the performance of Fortune 500 companies. It would also have details about the country’s unicorns, details about how much funding they can get, all sorts of ideas in order to reach a good visualized idea of the financial model.
After the visual identity is provided, after you have seen what the industry is like comparing your website to a glimpse of the industry’s performance and averages, you are going to be allowed to actually work on these variables to create a financial model in our innovative or enhanced financial model template.
Accuracy and Use of AI in Financial Modeling
Additionally, we always get asked the question of whether one should use artificial intelligence in creating a financial model template. Our answer to this is different.
Yes, ChatGPT and Claude can create your financial model template when it comes to execution. So, they would do the formatting and everything around that, which is good. But when it comes to what the financial model is really about, it is the accuracy of data, isn’t it? That is what the financial model should indicate.
Let’s say you are selling subscriptions for the first year. We need to see a financial model that would actually get the numbers right, not look fancy.
What Claude and Chatgpt are doing is that they are good with how it looks. Their job is to input a lot of data into these AI platforms to actually use them only for execution. They are not better than you when it comes to projection. They are far from better than the average mind.
If you have given it all the industry data, all the compound annual growth rates, all the country’s information, if you have given it all that information and then stated how to do the projections, only then will you use such platforms in a wise, correct way.