Financial Modeling Workflow
Complete guide to financial modeling including revenue projections, unit economics, runway calculations, and investor-ready financials
The Financial Modeling workflow helps founders build comprehensive financial models that inform decisions, guide fundraising, and track business health.
Overview#
| Property | Value |
|---|---|
| Phases | 4 |
| Tier | Business |
| Typical Duration | 1-2 weeks |
| Best For | Fundraising, budgeting, scenario planning |
Why Financial Modeling Matters#
Good financial models:
- Inform decisions - Understand impact of choices before making them
- Enable fundraising - Investors expect projections and unit economics
- Track progress - Compare actuals to plan
- Identify risks - Understand runway and burn rate
Financial Model Structure#
┌─────────────────────────────────────────────────────────────────────────┐
│ FINANCIAL MODEL STRUCTURE │
├─────────────────────────────────────────────────────────────────────────┤
│ │
│ ┌─────────────────────────────────────────────────────────────────┐ │
│ │ ASSUMPTIONS │ │
│ │ Pricing, growth rates, conversion rates, costs │ │
│ └─────────────────────────────────────────────────────────────────┘ │
│ │ │
│ ┌───────────────┼───────────────┐ │
│ │ │ │ │
│ ┌──────▼──────┐ ┌──────▼──────┐ ┌──────▼──────┐ │
│ │ REVENUE │ │ COSTS │ │ UNIT ECON │ │
│ │ Model │ │ Model │ │ Model │ │
│ └──────┬──────┘ └──────┬──────┘ └──────┬──────┘ │
│ │ │ │ │
│ └───────────────┼───────────────┘ │
│ │ │
│ ┌──────▼──────┐ │
│ │ P&L │ │
│ │ Statement │ │
│ └──────┬──────┘ │
│ │ │
│ ┌───────────────┼───────────────┐ │
│ │ │ │ │
│ ┌──────▼──────┐ ┌──────▼──────┐ ┌──────▼──────┐ │
│ │ CASH FLOW │ │ RUNWAY │ │ SCENARIOS │ │
│ │ │ │ │ │ │ │
│ └─────────────┘ └─────────────┘ └─────────────┘ │
│ │
└─────────────────────────────────────────────────────────────────────────┘
Phases#
Phase 1: Revenue Model (3-5 days)#
Agents: business-analyst
Build a detailed revenue model based on your pricing and growth assumptions.
Tasks:
- Define pricing tiers
- Model customer acquisition
- Project revenue by segment
- Calculate key revenue metrics
Revenue Model Template:
1## Revenue Model
2
3### Pricing Structure
4
5| Tier | Monthly Price | Annual Price | Target Segment |
6|------|---------------|--------------|----------------|
7| Free | $0 | $0 | Individual developers |
8| Pro | $29 | $290 (17% off) | Small teams |
9| Team | $99 | $990 (17% off) | Growing companies |
10| Enterprise | Custom ($500+) | Custom | Large organizations |
11
12### Revenue Drivers
13
14**Key Assumptions:**
15- Website visitors → Sign-ups: 5%
16- Sign-ups → Free users: 80%
17- Free → Paid conversion: 5%
18- Monthly churn (Pro/Team): 4%
19- Enterprise churn: 2%
20- Annual vs. monthly: 40% annual
21
22### Customer Acquisition Model
23
24| Month | Visitors | Sign-ups | Free | Pro | Team | Ent |
25|-------|----------|----------|------|-----|------|-----|
26| M1 | 1,000 | 50 | 40 | 2 | 0 | 0 |
27| M2 | 1,500 | 75 | 100 | 5 | 1 | 0 |
28| M3 | 2,500 | 125 | 180 | 10 | 2 | 0 |
29| M6 | 10,000 | 500 | 600 | 40 | 10 | 1 |
30| M12 | 50,000 | 2,500 | 2,500 | 180 | 50 | 5 |
31
32### MRR Projection
33
34```typescript
35// Revenue calculation model
36interface RevenueModel {
37 month: number;
38 newCustomers: CustomerCounts;
39 churnedCustomers: CustomerCounts;
40 activeCustomers: CustomerCounts;
41 mrr: number;
42 arr: number;
43}
44
45function calculateMRR(
46 customers: CustomerCounts,
47 pricing: PricingTiers
48): number {
49 return (
50 customers.pro * pricing.pro +
51 customers.team * pricing.team +
52 customers.enterprise * pricing.enterprise
53 );
54}
55
56// Example output
57const projections: RevenueModel[] = [
58 { month: 1, mrr: 58, arr: 696 },
59 { month: 3, mrr: 489, arr: 5868 },
60 { month: 6, mrr: 2150, arr: 25800 },
61 { month: 12, mrr: 12220, arr: 146640 },
62];Revenue by Segment#
| Month | Pro MRR | Team MRR | Ent MRR | Total MRR | Growth |
|---|---|---|---|---|---|
| M1 | $58 | $0 | $0 | $58 | - |
| M3 | $290 | $198 | $0 | $488 | 741% |
| M6 | $1,160 | $990 | $500 | $2,650 | 443% |
| M12 | $5,220 | $4,950 | $2,500 | $12,670 | 378% |
### Phase 2: Cost Model (2-3 days)
**Agents:** business-analyst
Model all costs including infrastructure, people, and services.
**Tasks:**
- Categorize fixed vs. variable costs
- Project infrastructure costs at scale
- Plan headcount and compensation
- Model marketing spend
**Cost Model Template:**
```markdown
## Cost Model
### Fixed Costs (Monthly)
| Category | Item | M1 | M6 | M12 | Notes |
|----------|------|-----|-----|-----|-------|
| Infrastructure | Hosting | $20 | $100 | $500 | Scales with users |
| Infrastructure | Database | $20 | $50 | $200 | Scales with data |
| Infrastructure | CDN/Storage | $0 | $20 | $100 | |
| Services | Auth (Clerk) | $25 | $50 | $100 | Per MAU |
| Services | Email (Resend) | $20 | $50 | $100 | |
| Services | Analytics | $0 | $0 | $100 | Free tier |
| Services | Error tracking | $26 | $26 | $50 | |
| Tools | Dev tools | $50 | $100 | $200 | |
| **Subtotal** | | **$161** | **$396** | **$1,350** | |
### Variable Costs
| Category | Unit Cost | M1 | M6 | M12 |
|----------|-----------|-----|-----|-----|
| Payment processing | 2.9% + $0.30 | $2 | $77 | $367 |
| Customer support | $0.50/user | $20 | $250 | $1,250 |
| **Subtotal** | | **$22** | **$327** | **$1,617** |
### People Costs
| Role | M1 | M6 | M12 | Notes |
|------|-----|-----|------|-------|
| Founder(s) | $0 | $0 | $8,000 | Salary starts M10 |
| Engineer #1 | $0 | $0 | $12,000 | Hire M9 |
| Engineer #2 | $0 | $0 | $0 | Hire M14 |
| Customer Success | $0 | $0 | $0 | Hire M15 |
| **Subtotal** | **$0** | **$0** | **$20,000** | |
### Marketing Costs
| Channel | M1 | M6 | M12 | Notes |
|---------|-----|-----|------|-------|
| Content/SEO | $0 | $500 | $1,000 | Writer |
| Paid ads | $0 | $500 | $2,000 | Test channels |
| Tools | $50 | $100 | $200 | SEO, social |
| **Subtotal** | **$50** | **$1,100** | **$3,200** | |
### Total Costs Summary
| Category | M1 | M6 | M12 |
|----------|-----|-----|------|
| Fixed costs | $161 | $396 | $1,350 |
| Variable costs | $22 | $327 | $1,617 |
| People | $0 | $0 | $20,000 |
| Marketing | $50 | $1,100 | $3,200 |
| **Total** | **$233** | **$1,823** | **$26,167** |
Phase 3: Unit Economics (2-3 days)#
Agents: business-analyst
Calculate and optimize unit economics for sustainable growth.
Tasks:
- Calculate Customer Acquisition Cost (CAC)
- Calculate Lifetime Value (LTV)
- Analyze LTV:CAC ratio
- Model payback period
Unit Economics Model:
1## Unit Economics
2
3### Customer Acquisition Cost (CAC)
4
5**Blended CAC Calculation:**
6
7| Channel | Monthly Spend | Customers | CAC |
8|---------|---------------|-----------|-----|
9| Organic (SEO/Content) | $500 | 50 | $10 |
10| Paid Acquisition | $2,000 | 30 | $67 |
11| Referral | $200 | 20 | $10 |
12| Sales | $5,000 | 5 | $1,000 |
13| **Blended** | **$7,700** | **105** | **$73** |
14
15**CAC by Segment:**
16
17| Segment | Avg. CAC | Target CAC | Status |
18|---------|----------|------------|--------|
19| Pro ($29/mo) | $25 | < $50 | Good |
20| Team ($99/mo) | $100 | < $200 | Good |
21| Enterprise ($500/mo) | $1,000 | < $1,500 | Good |
22
23### Lifetime Value (LTV)
24
25**LTV Formula:**LTV = ARPA × Gross Margin × (1 / Monthly Churn Rate)
**By Segment:**
| Segment | ARPA | Gross Margin | Churn | Lifetime | LTV |
|---------|------|--------------|-------|----------|-----|
| Pro | $29 | 85% | 5% | 20 mo | $493 |
| Team | $99 | 85% | 4% | 25 mo | $2,104 |
| Enterprise | $500 | 80% | 2% | 50 mo | $20,000 |
### LTV:CAC Ratio
| Segment | LTV | CAC | LTV:CAC | Target | Status |
|---------|-----|-----|---------|--------|--------|
| Pro | $493 | $25 | 19.7:1 | > 3:1 | Excellent |
| Team | $2,104 | $100 | 21.0:1 | > 3:1 | Excellent |
| Enterprise | $20,000 | $1,000 | 20.0:1 | > 3:1 | Excellent |
| **Blended** | **$1,532** | **$73** | **21.0:1** | > 3:1 | **Excellent** |
### Payback Period
**Formula:**
Payback = CAC / (ARPA × Gross Margin)
| Segment | CAC | Monthly Contribution | Payback |
|---------|-----|---------------------|---------|
| Pro | $25 | $24.65 | 1.0 mo |
| Team | $100 | $84.15 | 1.2 mo |
| Enterprise | $1,000 | $400 | 2.5 mo |
**Target:** < 12 months
**Status:** All segments well under target
### Unit Economics Dashboard
┌─────────────────────────────────────────────────────────────────────────┐ │ UNIT ECONOMICS DASHBOARD │ ├─────────────────────────────────────────────────────────────────────────┤ │ │ │ LTV:CAC RATIO PAYBACK PERIOD │ │ ┌─────────────┐ ┌─────────────┐ │ │ │ │ │ │ │ │ │ 21:1 │ │ 1.5 mo │ │ │ │ Target │ │ Target │ │ │ │ >3:1 │ │ <12 mo │ │ │ │ ✓ GOOD │ │ ✓ GOOD │ │ │ └─────────────┘ └─────────────┘ │ │ │ │ GROSS MARGIN CHURN RATE │ │ ┌─────────────┐ ┌─────────────┐ │ │ │ │ │ │ │ │ │ 85% │ │ 4% │ │ │ │ Target │ │ Target │ │ │ │ >70% │ │ <5% │ │ │ │ ✓ GOOD │ │ ✓ GOOD │ │ │ └─────────────┘ └─────────────┘ │ │ │ └─────────────────────────────────────────────────────────────────────────┘
Phase 4: Financial Statements & Scenarios (3-5 days)#
Agents: business-analyst
Build comprehensive financial statements and scenario analysis.
Tasks:
- Create P&L statement
- Build cash flow projection
- Calculate runway
- Model scenarios (base, bull, bear)
Profit & Loss Statement:
1## P&L Statement (Year 1, Monthly)
2
3| Line Item | M1 | M3 | M6 | M9 | M12 | FY1 |
4|-----------|-----|-----|-----|------|------|------|
5| **Revenue** | | | | | | |
6| Subscription | $58 | $488 | $2,650 | $6,500 | $12,670 | $52,000 |
7| Services | $0 | $0 | $0 | $0 | $0 | $0 |
8| **Total Revenue** | **$58** | **$488** | **$2,650** | **$6,500** | **$12,670** | **$52,000** |
9| | | | | | | |
10| **COGS** | | | | | | |
11| Infrastructure | $40 | $80 | $170 | $350 | $700 | $3,200 |
12| Payment processing | $2 | $14 | $77 | $189 | $367 | $1,508 |
13| **Total COGS** | **$42** | **$94** | **$247** | **$539** | **$1,067** | **$4,708** |
14| | | | | | | |
15| **Gross Profit** | **$16** | **$394** | **$2,403** | **$5,961** | **$11,603** | **$47,292** |
16| **Gross Margin** | 28% | 81% | 91% | 92% | 92% | 91% |
17| | | | | | | |
18| **Operating Expenses** | | | | | | |
19| People | $0 | $0 | $0 | $12,000 | $20,000 | $48,000 |
20| Marketing | $50 | $200 | $1,100 | $2,000 | $3,200 | $16,800 |
21| Tools & Services | $121 | $150 | $200 | $250 | $300 | $2,500 |
22| **Total OpEx** | **$171** | **$350** | **$1,300** | **$14,250** | **$23,500** | **$67,300** |
23| | | | | | | |
24| **Operating Income** | **-$155** | **$44** | **$1,103** | **-$8,289** | **-$11,897** | **-$20,008** |
25| | | | | | | |
26| **Net Income** | **-$155** | **$44** | **$1,103** | **-$8,289** | **-$11,897** | **-$20,008** |Cash Flow & Runway:
1## Cash Flow Statement
2
3### Starting Position
4- Beginning cash: $50,000 (bootstrapped/pre-seed)
5
6### Monthly Cash Flow
7
8| Month | Revenue | Costs | Net CF | Cash Balance |
9|-------|---------|-------|--------|--------------|
10| M1 | $58 | $213 | -$155 | $49,845 |
11| M3 | $488 | $444 | $44 | $49,623 |
12| M6 | $2,650 | $1,547 | $1,103 | $51,500 |
13| M9 | $6,500 | $14,789 | -$8,289 | $45,000 |
14| M12 | $12,670 | $24,567 | -$11,897 | $30,000 |
15
16### Runway Calculation
17
18**Current Runway:**Runway = Cash Balance / Monthly Burn Rate Runway = $30,000 / $11,897 = 2.5 months (at M12 burn)
**Runway by Stage:**
| Period | Cash | Monthly Burn | Runway |
|--------|------|--------------|--------|
| Now (M1) | $50,000 | $155 | 322 mo |
| M6 | $51,500 | -$1,103 | Profitable |
| M12 | $30,000 | $11,897 | 2.5 mo |
**Note:** Burn increases with hiring. Need to fundraise by M10 or reach profitability.
### Break-Even Analysis
**Monthly Break-Even:**
- Fixed costs at scale: ~$25,000/mo
- Contribution margin: 85%
- Break-even MRR: $25,000 / 0.85 = $29,412
**Timeline to Break-Even:** Month 14-16 (projected)
Scenario Analysis:
1## Scenario Analysis
2
3### Base Case
4**Assumptions:**
5- 15% MoM growth in visitors
6- 5% conversion to paid
7- 4% monthly churn
8- Hiring starts M9
9
10**Outcome:**
11- M12 MRR: $12,670
12- M12 ARR: $152,040
13- Runway at M12: 2.5 months
14
15### Bull Case (+50% growth)
16**Assumptions:**
17- 22% MoM growth (viral/PR hit)
18- 7% conversion (better onboarding)
19- 3% monthly churn
20- Earlier hiring
21
22**Outcome:**
23- M12 MRR: $28,000
24- M12 ARR: $336,000
25- Runway at M12: 6 months
26
27### Bear Case (-30% growth)
28**Assumptions:**
29- 10% MoM growth (slower market)
30- 3% conversion
31- 5% monthly churn
32- Delayed hiring
33
34**Outcome:**
35- M12 MRR: $5,800
36- M12 ARR: $69,600
37- Runway at M12: 8 months (lower burn)
38
39### Scenario Summary
40
41| Scenario | M12 ARR | Runway | Required Action |
42|----------|---------|--------|-----------------|
43| Bull | $336,000 | 6 mo | Optional raise |
44| Base | $152,040 | 2.5 mo | Raise by M10 |
45| Bear | $69,600 | 8 mo | Cut costs, extend |
46
47### Sensitivity Analysis
48
49**Revenue Sensitivity to Conversion Rate:**
50
51| Conversion | M12 MRR | Change |
52|------------|---------|--------|
53| 3% | $7,600 | -40% |
54| 4% | $10,130 | -20% |
55| 5% (base) | $12,670 | - |
56| 6% | $15,200 | +20% |
57| 7% | $17,740 | +40% |
58
59**Runway Sensitivity to Burn Rate:**
60
61| Monthly Burn | Runway (from $50K) |
62|--------------|-------------------|
63| $5,000 | 10 months |
64| $10,000 | 5 months |
65| $15,000 | 3.3 months |
66| $20,000 | 2.5 months |Starting the Workflow#
1# Start financial modeling workflow
2bootspring workflow start business-financial
3
4# Create revenue model
5bootspring business financial revenue
6
7# Calculate unit economics
8bootspring business financial unit-economics
9
10# Generate P&L
11bootspring business financial pnl
12
13# Run scenario analysis
14bootspring business financial scenariosDeliverables#
A successful Financial Modeling workflow produces:
- Revenue model with projections
- Cost model (fixed, variable, people)
- Unit economics (CAC, LTV, payback)
- P&L statement (monthly, annual)
- Cash flow projection
- Runway calculation
- Scenario analysis (bull, base, bear)
- Investor-ready financial summary
Best Practices#
- Be conservative - Overestimate costs, underestimate revenue
- Show your work - Document assumptions clearly
- Build for scenarios - Plans change, models should adapt
- Update monthly - Compare actuals to projections
- Focus on unit economics - LTV:CAC > 3:1 is critical
- Know your runway - Never be surprised by cash position
Key Metrics for Investors#
| Metric | Seed Stage Target | Series A Target |
|---|---|---|
| MRR | $10-50K | $100K+ |
| MoM Growth | 15-20% | 10-15% |
| Gross Margin | > 70% | > 80% |
| LTV:CAC | > 3:1 | > 3:1 |
| Payback | < 12 mo | < 12 mo |
| Net Revenue Retention | > 100% | > 120% |
Common Pitfalls#
- Hockey stick projections without evidence
- Ignoring churn in revenue models
- Underestimating people costs
- Not stress-testing scenarios
- Forgetting variable costs at scale