November 4, 2022
Startup Finance

4 Reasons Why Startups Need Financial Modeling Software

If you're a startup founder, chances are you wear a lot of hats. You're the CEO, the CFO, the janitor, and everything in between. One minute you're pitching to investors, and the next you're mopping the floors. It's a lot to juggle, and it's easy to let things fall through the cracks.
John Ladaga

One thing that shouldn't fall by the wayside is your company's financial health.

After all, what good is a startup if it's not making money? That's where financial modeling software comes in. Financial modeling software is a tool that can help you track your company's finances, identify areas of improvement, and make better decisions for the future.

4 reasons why every startup needs financial modeling software:

  1. You need to track your progress. If you want to know whether your startup is on track to hit its financial goals, you need to have a clear picture of where it stands today. Financial modeling software gives you that picture by tracking your revenue, expenses, and other key metrics over time. This information is essential for making informed decisions about where to allocate your resources and how to grow your business.
  2. You need to raise money from investors. Investors want to see that your startup has a clear plan for how it will use their money to generate returns. A well-crafted financial model will show investors exactly how their money will be used and how it will help your business grow. This level of transparency is essential for winning over potential investors.
  3. You need to make informed decisions about the future. No one knows what the future holds, but financial modeling can give you a pretty good idea. By projecting your revenue, expenses, and other key metrics into the future, you can make informed decisions about how to grow your business sustainably. This forecasting ability is invaluable for startups that want to avoid making costly mistakes down the road.
  4. You need to keep an eye on your burn rate. "Burn rate" is a term used to describe the rate at which a startup is spending its capital. For example, if your startup has $1 million in the bank and it's spending $500,000 per month, its burn rate is $500,000 per month. You can use this info to also calculate your Runway...with a burn rate of $500K and a starting cash balance of $1,000,000, you have 2 months of runway (assuming you don't have revenue coming in). Keeping an eye on your burn rate is crucial for ensuring that your startup doesn't run out of money before it has a chance to become profitable. Financial modeling software can help you track your burn rate so that you can make adjustments as needed.

In Conclusion:

Financial modeling software is an essential tool for startups founders who want to ensure their company's long-term success. By tracking progress, raising money from investors, making informed decisions about the future, and keeping an eye on their burn rate, startups can set themselves up for success from day one. Our team is on a mission to make the most founder friendly financial modeling software on the planet. With our platform you don't need to be a pro or have a degree in finance to build an investor-ready model that you can trust. We offer world class software at the price of an Excel template - give it a shot and let us know how you like it!