Using Financial Models for Decision Making - How to Leverage Your Model for Strategic Planning and Fundraising (4 of 5)

4 of 5: Using Financial Models for Decision Making - How to Leverage Your Model for Strategic Planning and Fundraising

"𝙀𝙨𝙨𝙚𝙣𝙩𝙞𝙖𝙡𝙡𝙮, 𝙖𝙡𝙡 𝙢𝙤𝙙𝙚𝙡𝙨 𝙖𝙧𝙚 𝙬𝙧𝙤𝙣𝙜, 𝙗𝙪𝙩 𝙨𝙤𝙢𝙚 𝙖𝙧𝙚 𝙪𝙨𝙚𝙛𝙪𝙡." - George Box (British statistician 1919-2013)

This week, we've covered the basics and key components of financial modeling. It might be overwhelming, but don't get paralyzed with perfection and avoid making one altogether. They are useful - let's dive into how you can use your financial model for strategic planning and fundraising.

𝗙𝘂𝗻𝗱𝗿𝗮𝗶𝘀𝗶𝗻𝗴
• Pitching to Investors: Presenting financial projections to potential investors by highlighting growth potential and financial stability to attract investment.
• Valuation: Using financial models to determine company valuation, which influences investor perceptions and confidence.
• Loan Applications: Supporting loan applications by showing banks and lenders your financial projections to secure funding.

𝗦𝘁𝗿𝗮𝘁𝗲𝗴𝗶𝗰 𝗣𝗹𝗮𝗻𝗻𝗶𝗻𝗴
• Forecasting Growth: Using historical data and assumptions to project future revenue and expenses accurately.
• Budgeting: Allocating resources effectively based on your financial model to ensure financial health and resource optimization.
• Scenario Analysis: Creating different scenarios to plan for various business conditions, preparing best-case, worst-case, and most likely scenarios to navigate uncertainties.

Not only does creating a model help you figure out if your idea will even work in current economics, it can significantly help your ongoing strategic planning and fundraising efforts.

Practically speaking, it allows you to review and make decisions: Can you hire a project manager? Do you need to adjust your marketing spend to get better ROI?

𝗦𝘁𝗮𝘆 𝘁𝘂𝗻𝗲𝗱 𝗳𝗼𝗿 𝗙𝗿𝗶𝗱𝗮𝘆 𝘄𝗵𝗲𝗿𝗲 𝗜'𝗹𝗹 𝘀𝗵𝗮𝗿𝗲: 𝗖𝗼𝗺𝗺𝗼𝗻 𝗣𝗶𝘁𝗳𝗮𝗹𝗹𝘀 𝗮𝗻𝗱 𝗕𝗲𝘀𝘁 𝗣𝗿𝗮𝗰𝘁𝗶𝗰𝗲𝘀 𝗶𝗻 𝗙𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗠𝗼𝗱𝗲𝗹𝗶𝗻𝗴 - 𝗧𝗶𝗽𝘀 𝗳𝗼𝗿 𝗺𝗮𝗶𝗻𝘁𝗮𝗶𝗻𝗶𝗻𝗴 𝗮𝗻 𝗮𝗰𝗰𝘂𝗿𝗮𝘁𝗲 𝗮𝗻𝗱 𝘂𝘀𝗲𝗳𝘂𝗹 𝗳𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗺𝗼𝗱𝗲𝗹.

If you found this helpful, share it with a founder who might be interested. Let’s spread the knowledge and help more businesses succeed!